Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — EMPLOYMENT

Scotland

Mr. Bence: asked the Minister of Labour what has been the loss of skilled manpower from Scotland in the years 1959, 1960, 1961, 1962, and 1963, respectively.

The Minister of Labour (Mr. R. J. Gunter): I regret that information about the loss of skilled manpower is not available. It is estimated, however, that the net loss of employees of all kinds was 9,000, 24,000, 11,000, 18,000, and 13,000 in the years 1959, 1960, 1961, 1962 and 1963, respectively.

Mr. Bence: Is my right hon. Friend aware that these figures are shocking to us in Scotland, because at present there is a shortage of skilled labour in Scotland? Are we right in assuming that the major loss has been in skilled labour? Will my right hon. Friend consult the responsible Cabinet Minister to see if something can be done to bring new scientific-based industries to Scotland so that we can keep our skilled labour at home?

Mr. Gunter: It is very difficult to say what percentage of skilled labour is involved in the total figure, but we are very much aware of the shortage of skilled labour in certain parts of Scotland. I believe that my hon. Friend's next Question will have something to do with that.

Mr. G. Campbell: Will not the situation be made more difficult by the 7 per cent. Bank Rate, which must impede regional development?

Mr. Gunter: I do not think that a supplementary question about the 7 per cent. Bank Rate relates to the Question I am asked on the Order Paper.

Mr. Bence: asked the Minister of Labour what steps he is taking to provide training facilities in Scotland to meet the needs of new and expanding industries.

Mr. Gunter: I am at present reviewing the adequacy of training facilities throughout the country including Scotland. Under the present programme for the expansion of the Government training centres in Scotland four new centres have been provided within the last eighteen months, making five in all, and two more will be coming into use next year.

Mr. Bence: I thank my right hon. Friend for the information he has given me. Will he inquire what measures are being taken to provide training for men between 45 and 50, because many men in this age group are being made redundant in the Scottish coal industry? In many cases these are the sort of men who need training for new skills.

Mr. Gunter: We hope that the centres will be able to train 1,700 adults and 144 first-year apprentices annually.

Mr. Godber: Will the right hon. Gentleman confirm that the figures he gave show that a considerable proportion of the increased number of places being made available in Government training centres is devoted to Scotland?

Mr. Gunter: Yes, that is true.

Disabled Persons

Mr. Hale: asked the Minister of Labour whether he will seek the early provision of additional forms of protective employment for persons disabled by chronic disease but capable of and needing whole-time or part-time employment.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Richard Marsh): Provision is made for severely disabled persons in the employment field who are not able to work in ordinary industry, in Remploy factories and in sheltered workshops run by local authorities and voluntary bodies. The possibility of extending this provision is kept under regular review. The provision of


occupation for those outside the employment field is a matter for my right hon. Friend the Minister of Health.

Mr. Hale: Is not my hon. Friend aware that that reply does not deal with the cases I have in mind? Though the Oldham Corporation has taken magnificent advantage of the facilities for providing employment for some unemployables, in the case of chronic disease I have been trying for years to get employment for two men suffering from haemophilia? I have cases of epilepsy petit mal, byssinosis, Parkinson's disease and disseminated sclerosis, muscular distrophy, all men suffering terribly, all men who would benefit from employment, and all men who need this sort of provision which a Labour Government really should provide.

Mr. Marsh: I am sure everybody accepts the point, but the distinction has to be made. Remploy exists for people who are capable of productive effort, and we hope that Remploy will be able to increase the number of severely disabled persons whom it employs. As for the other people, this is very much a question for local authorities and voluntary bodies. The Government are looking at both sides of this problem.

Mr. Peter Emery: During the regular reviews, will the Joint Parliamentary Secretary also bear in mind blind persons? Does he realise that after blind persons have been retrained for specific jobs they are often only able to obtain employment for as little as one or two days a week? This is most discouraging for them, and will the hon. Gentleman do everything in his power to ensure that employment is built up for blind persons?

Mr. Marsh: This will be taken into account.

Middle-aged Persons

Mr. Dudley Smith: asked the Minister of Labour if he is aware that men who fall out of employment over the age of 50 years often have serious difficulty in obtaining comparably paid posts; and if he will establish a Departmental inquiry into this problem.

Mr. Gunter: There is a problem here. It is being tackled in a number of ways

and I do not think a Departmental inquiry would help at the moment.

Mr. Smith: Is the Minister aware that the parrot cry for "young men and more and more young men" is becoming increasingly apparent in the professions and in industry? Is he further aware that because of this growing trend, many middle-aged men with good qualifications both in the professions and in industry, including clerical work, find it increasingly difficult to get work if they are thrown out of employment, and they feel that society has turned its back on them? Does he not feel that his Department ought to give a lead in these matters in what is a serious human problem?

Mr. Gunter: The Ministry of Labour is trying to give a lead in this matter. I agree with the hon. Gentleman that this is one of the cruellest problems in society at the present time. But this is rather a question of attitudes in industry than of inter-departmental inquiries. As the hon. Gentleman is aware, we are trying through the employment exchange service to encourage employers to get away from this rigid attitude. In addition, I propose that the National Joint Advisory Council shall undertake early studies of any of the facts of which we are not already aware—although we are aware of most of them—to see if we can deal with this problem in a far more humane way.

Mr. Ridley: Is the right hon. Gentleman aware that since the present Government insist on reviewing practically every defence contract as well as practically every aircraft project, he may have many more of these people on his hands? Will he, therefore, redouble his efforts to find a way of helping them?

Mr. Gunter: I do not know what the hon. Gentleman means by "redoubling" my efforts. The efforts are very concrete and valid.

Mr. Manuel: Does my right hon. Friend agree that one of the best methods of tackling this problem is by creating more retraining facilities? With regard to the training centres that have been set up, has he made certain that they are geared to the existing employment agencies which are set up in the various areas, in order to avoid travelling and breaking up homes when men secure new employment?

Mr. Gunter: Many of the men referred to in this question are not the sort of persons who would take to retraining. I think they have already built one career. What they are looking for—and this creates one of the greatest difficulties—is jobs with comparable rates of pay. It is very difficult to place them in industry if younger men are already in the channel of promotion. However, I can assure the House that I am deeply aware of the agony that this problem causes many people.

Lichfield and Tamworth

Mr. Snow: asked the Minister of Labour whether he will draw to the attention of the Lichfield and Tamworth Local Employment Committee the need to investigate the shortage of work paid at rates competitive with Birmingham in the area, resulting in the continued commuting of workers to Birmingham; and if he will request the committee in question to make this matter the subject of a special report.

Mr. Marsh: The desirability of doing this is very much a matter for the Committee itself. I gave an undertaking last week that the suggestion would be brought to the Committee's notice.

Mr. Snow: I am obliged to my hon. Friend. Is he aware that the legacy of high unemployment in other parts of the country left by the previous Government has resulted in lack of industry coming into this overspill area and that there is some evidence of personal stress due to excessive travelling time and pecuniary loss?

Mr. Marsh: As my hon. Friend will appreciate, the general question of the distribution of industry is one for my right hon. Friend the President of the Board of Trade. As to the effects of the last Administration, it would take too long to deal with all of them.

Mr. Snow: asked the Minister of Labour whether he will arrange for separate committees to sit in respect of the Tamworth and Lichfield Local Employment Committee in view of the changed working population situation since the original single committee was instituted.

Mr. Marsh: No, Sir; but my right hon. Friend will reconsider the balance of representation between the two areas.

Mr. Snow: Is my hon. Friend aware that since the original committee was formed the industrial development in each of these towns has become quite important and there seems to be some difference of interest between the towns which might justify separate committees?

Mr. Marsh: Although employment has been growing faster in Lichfield than in Tamworth, the two towns are very closely linked and they are not big enough to justify separate committees.

Norfolk

Mr. Norwood: asked the Minister of Labour if, in view of the importance of regional planning and the need for full information on which to base it, he will take steps to publish average weekly earnings of male manual workers in the city of Norwich and the county of Norfolk for a suitable date in 1964.

The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Ernest Thornton): Reliable figures of average earnings are not available for areas smaller than "regions", and I am afraid, therefore, I cannot publish the information requested by my hon. Friend.

Mr. Norwood: Is the hon. Gentleman aware that the region to which he refers in our case stretches from Poole to Cromer, a distance of more than 200 miles, that it includes a large proportion of the industrial fringes of London and that all the average figure given is, therefore, totally misleading so far as Norfolk is concerned? Would not the hon. Gentleman agree with me that a more local figure, if not so accurate, is preferable to statistics so general as to be virtually useless?

Mr. Thornton: I quite appreciate that the eastern and southern region covers a very large area indeed. We shall certainly bear this in mind in any review that is undertaken, but I would remind the hon. Gentleman that these statistics are based on samples and on voluntary information given on a confidential basis. They must not be given for so small an area that an individual firm can be identified.

South-West Region

Mr. Wingfield Digby: asked the Minister of Labour what increase there has been in average earnings in the


South-West in the last year, to the nearest convenient date; and how it compares with increases in other areas.

Mr. Thornton: The increase in average weekly earnings of adult male manual workers in the south-west region was 31s. 9d.—that is from 302s. 9d. in April, 1963 to 334s. 6d. in April, 1964. As the second part of the reply is a table of figures I will, with permission, circulate a statement in the OFFICIAL REPORT.

Mr. Digby: Is the hon. Gentleman aware that there is a lot of leeway to be made up? Will he speak to his right

INCREASE IN AVERAGE WEEKLY EARNINGS OF MANUAL WORKERS (MEN AGED 21 YEARS AND OVER) IN SOUTH WESTERN REGION COMPARED WITH INCREASES IN OTHER REGIONS AND IN UNITED KINGDOM AS A WHOLE FOR ALL INDUSTRIES COVERED BY HALF-YEARLY EARNINGS AND HOURS ENQUIRIES


Region
Average Weekly Earnings of Men (21 years and over)
Increase between April, 1963 and April, 1964


April, 1963
April, 1964
Absolute
Per cent.




s.
d.
s.
d.
s.
d.



South Western
…
302
9
334
6
31
9
10·5


London and South Eastern
…
342
9
369
6
26
9
7·8


Eastern and Southern
…
327
4
358
0
30
8
9·4


Midlands
…
334
9
368
3
33
6
10·0


Yorkshire and Lincolnshire
…
310
0
338
4
28
4
9·1


North Western
…
313
5
341
5
28
0
8·9


Northern
…
306
11
337
11
31
0
10·1


Scotland
…
297
4
326
2
28
10
9·7


Wales
…
329
7
354
11
25
4
7·7


Northern Ireland
…
259
5
287
5
28
0
10·8


United Kingdom
…
323
1
352
5
29
4
9·1

Trade Unions (Amalgamations)

Mr. Gresham Cooke: asked the Minister of Labour if, in view of the amalgamations and mergers taking place among industrial companies, he will introduce legislation to encourage the 180 unions affiliated to the Trades Union Congress to amalgamate so as to avoid the management of some factories having to negotiate with a dozen or more unions.

Mr. Gunter: There was such legislation in the last Parliament. The Trade Union (Amalgamations, etc.) Act, 1964, made it much easier for unions to amalgamate or transfer their engagements.

Mr. Gresham Cooke: Would the Minister not agree that, in view of the fact that in some modern European countries there are only about a dozen unions and

hon. Friend the Secretary of State for Economic Affairs, who gave me a most unsatisfactory reply last Thursday on the question of tackling this problem?

Mr. Thornton: I read the reply and I thought it was quite a good one. I think the hon. Gentleman will be interested to see the figures, because his Question is about increases. When the hon. Gentleman sees those figures he will observe that, from the point of view of absolute figures and in percentage terms, the South-West is next to the top of the 10 regions.

Following is the statement:

we have 180, we are therefore beginning to look old-fashioned? Is the Minister also aware that there is a move among the shop stewards in the Ford Motor Company to amalgamate all workers under one umbrella? Could he not use his influence with the unions to reduce this great number.

Mr. Gunter: I agree with the desirability of the hon. Member's objective, but when he asks for legislation to encourage amalgamation I find it difficult to envisage such legislation. We shall move towards amalgamation with as much speed as is possible.

Mr. Godber: While welcoming the Minister's reference to the Trade Union (Amalgamations etc.) Act which was brought forward by a Member of this party in the last Parliament, may I ask


if he will do all he can? I will not ask him to redouble his efforts because he seemed rather touchy about that earlier on; I suppose that is because of the bed of nails he lives on. May I ask him to do all he can? I am sure he realises the need to get more and more amalgamation. We introduced the Act to which he referred to assist the unions and I hope that they will respond accordingly.

Mr. Gunter: I was not touchy about the suggestion that I should redouble my efforts. I think it is a bit of a sauce, however, after being Minister for six weeks, to be told to redouble my efforts when hon. Members opposite were in office for years. I can assure the right hon. Gentleman that, in spite of the trouble that I usually get into on the question of trade union reform, I shall continue to do all I can.

Mr. Howe: Does the right hon. Gentleman not agree that this matter is of particular importance not only in the motor industry, to which my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) has referred, but also to the shipbuilding industry where there are sometimes as many as two dozen unions in the same yard? In view of the importance of both these industries to the continuing prosperity of Merseyside, will the right hon. Gentleman use his best efforts in both these industries to hasten as much progress as can be achieved?

Mr. Gunter: I can only repeat that I will do all I can to influence the course of events. All the problems in industry and in negotiations do not arise from the multiplicity of trade unions. There is some multiplicity on the side of the employers as well.

Redundancy Pay Scheme

Mr. Ridley: asked the Minister of Labour when he intends to introduce legislation providing for a redundancy pay scheme.

Mr. Gunter: Consultations with industry are proceeding urgently and legislation will be introduced as soon as possible.

Mr. Ridley: Would the right hon. Gentleman not agree that he inherited a great deal of work on this subject? Can he tell the House whether he intends to

jettison that work, or will he bring forward some of the proposals which were near to fruition? In particular, does the right hon. Gentleman intend to start first on a severance pay scheme or to start on a wage-related benefits scheme?

Mr. Gunter: The Question asks the Minister of Labour
when he intends to introduce legislation providing for a redundancy pay scheme".
I am now in active consultation with both sides of industry on this matter. We shall introduce legislation on redundancy as soon as possible.

Automation

Mr. Dudley Smith: asked the Minister of Labour if he will initiate new studies into the effects and consequences of automation.

Mr. Gunter: The future programme of work of the Manpower Research Unit will pay full regard to the effects of automation on manpower and I will also arrange to keep under review the need for further work on the effects on human relations in industry.

Mr. Smith: Does the right hon. Gentleman agree that both management and unions require a much better appreciation of the consequences of both the benefits and the difficulties of automation, particularly as this revolution is proceeding at a very fast pace and we want it to come as a harmonious one? Should not the survey, apart from manpower, be on a much broader basis so that we can coordinate the various reports which are coming through and publish them from time to time?

Mr. Gunter: Yes, indeed. First, the unit is exploring the possibilities of manpower forecasts on the basis of the estimated trends in output and productivity, including the effects of automation. Secondly, the unit is planning to follow up its current studies of changes in the occupational structure of the metal industries and the effect of computers on office employment with new studies of the changing structure of particular industris, and on the introduction of particular new techniques. We are doing a great deal of work and, if the right hon. Member for Grantham (Mr. Godber) wants praise for it, I am glad to inherit the work which he has done.

Dockyard Workers (Wages)

Mr. Evelyn King: asked the Minister of Labour if he will state the minimum weekly wage for a labourer at Her Majesty's Naval Base, Portland, and the minimum weekly wage for a London worker employed in a civilian dockyard, respectively.

Mr. Thornton: The minimum weekly wage for a labourer at Her Majesty's Naval Base, Portland is £10 8s. for a week of 42 hours. The minimum weekly wage for a London worker employed in a civilian shipyard is £9 11 s. for a week of 41 hours, but, in addition a compensatory payment of 15s. a week is made to workers on plain time rates who have had no payments by results, incentive payments or bonuses.

Mr. King: Will the Parliamentary Secretary agree that when the various complications are taken into account there is a very large discrepancy between the amounts actually earned in London and those earned in Dorset and that this ought to be remedied? Does not he agree that this particular case can only be remedied by the Government who directly employ these men? May we hope that they will do something about it?

Mr. Thornton: On the latter part of the supplementary question, it will be a matter for the employer on the one hand and the trade unions who represent the men on the other. The difference in the minimum weekly wage between the two places which the hon. Member mentioned is only about 1½ per cent.

Mr. King: But the earnings?

Trade Unions and Employers' Associations (Inquiry)

Mr. Wingfield Digby: asked the Minister of Labour what form the inquiry into trades unions and their place in law and national affairs will take.

Mr. Godber: asked the Minister of Labour if he will make a statement on his discussions with both sides of industry about an inquiry into the law affecting trade unions and employers' organisations and their rôle in modern conditions.

Mr. Gunter: I am glad to say that following the Government's decision to introduce legislation this Session to deal with the unsatisfactory situation created by the judgment in Rookes v. Barnard there can now be an inquiry into trade unions and employers' associations in a satisfactory atmosphere and with the full co-operation of the Trades Union Congress. I think we need an inquiry into the rôle of both trade unions and employers' associations in our modern society. I am at present consulting the Trades Union Congress and the British Employers' Confederation.

Mr. Digby: Is the right hon. Gentleman aware that many people will welcome that news? Can he give us any more idea of the form of the inquiry he has in mind and of the kind of evidence it will take?

Mr. Gunter: I can only say at this point that I am in consultation with the T.U.C. and the British Employers' Confederation, but, as the hon. Member knows, I would wish for a very high level and searching inquiry.

Mr. Godber: While welcoming the extremely important announcement which the right hon. Gentleman has made, may I ask whether he can give any indication of how soon he will be able to give us the terms of reference of this body as well as information about the type of body and how soon it will start sitting? The right hon. Gentleman in his reply referred also to legislation on the Rookes v. Barnard issue. Will the inquiry start sitting before we have that legislation?

Mr. Gunter: While I am not in charge of the time-table in this House, it is hoped that legislation dealing with the Rookes v. Barnard case will be introduced shortly after Christmas. I hope, in the comparatively near future, to be able to tell the House the terms of reference of the inquiry.

Mr. Ridsdale: Will the right hon. Gentleman be putting a time-table on the inquiry?

Mr. Gunter: I have not thought of that. I do not know whether or not such authority rests with me.

Immingham Dockyard Workers

Sir C. Osborne: asked the Minister of Labour if he is aware of the dissatisfaction among Immingham dockers at the working of the Dock Labour Scheme for Grimsby and Immingham which gives priority of jobs at Immingham to Grimsby dockers; if he will vary the scheme, and establish a separate register for Immingham workers; and if he will make a statement.

Mr. Marsh: No such dissatisfaction has been reported to me. I am, however, having inquiries made and will write to the hon. Gentleman.

Sir C. Osborne: Will the hon. Gentleman take it from me that many of my constituents feel that they have had a very raw deal for many years? Is he aware that they have made protests to the branch that amalgamates the two smaller units and that the Immingham men feel that they always get the worse part of the choice because the majority of the men in the branch live at Grimsby? Will the hon. Gentleman see that they get a fair crack of the whip?

Mr. Marsh: The hon. Member will readily appreciate that there are enormous numbers of people who have had a raw deal in recent years. We hope to change that. The day-to-day working of the scheme at any particular port is a matter for the dock labour boards, and my right hon. Friend has no powers to intervene.

Sir C. Osborne: On a point of order, In view of the absolutely unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter at the earliest possible opportunity.

Industrial Training

Mr. Godber: asked the Minister of Labour if he will state the relationship between the inter-departmental committee on industrial training and retraining which he has appointed, and the Central Training Council established under the Industrial Training Act, 1964.

Mr. Gunter: The inter-departmental committee is a part of the machinery of government for securing co-ordination between the Government Departments concerned on important training issues. It

is in no sense a substitute for the Central Training Council. The Council will remain the principal forum in which the views of leaders from industry and the educational world can be focused and brought to bear on the development of policy in the field of industrial training. Discussions on the inter-departmental committee will, of course, be very much influenced by the views of the Council, and both I and my colleagues will give the greatest weight to these views in the decisions we have to make.

Mr. Godber: While welcoming the emphasis which the Minister has placed on the importance of the work of the Central Training Council, which I fully endorse, may I ask whether it is not some-what unusual to publish formal details about an inter-departmental committee and particularly its terms of reference? The right hon. Gentleman and I know very well that there are many interdepartmental committees at all levels of Government which meet all the time, and they are not usually given this formality. Does not this announcement give special importance to this committee? Can the right hon. Gentleman inform us that the Central Training Council will continue to be, as intended, the main forum for the discussion of these problems?

Mr. Gunter: I considered it important to inform the House of the establishment of this committee in view of the announcement in the Queen's Speech of the Government's intention to improve arrangements for industrial training. Having said that, I again emphasise that the Central Training Council will be the main forum.

Mr. Godber: In the light particularly of the first part of that answer, is it not true that this is really a piece of window dressing on behalf of the Prime Minister?

Mr. Gunter: No. The right hon. Gentleman is far wider awake than that. He knows very well that when the machinery of Government for education and for labour is inter-mixed, it is necessary to have a co-ordinating body. It is not a piece of window-dressing. It is a very important piece of co-ordination in industrial training. I again emphasise that it will perform a useful function, but the Central Training Council will still be the main forum.

International Labour Organisation (African Regional Conference)

Sir Richard Glyn: asked the Minister of Labour which associations of employers and workers accepted his invitation to send representatives to the second African Regional Conference of the International Labour Organisation which opened at Addis Ababa on 30th November.

Mr. Gunter: The British Employers' Confederation and the Trades Union Congress were invited to appoint representatives to a full tripartite delegation to this conference. The B.E.C. accepted this invitation but the T.U.C. did not. In these circumstances, it was decided to send an observer delegation instead. The B.E.C. did not wish to join such a delegation. I understand that the T.U.C. would have done so but found it impracticable to send anyone.

Sir Richard Glyn: In view of recent developments, will the Minister take steps to assert the right of free association of employers' organisations and trade unions in communist-controlled areas such as Tanzania?

Mr. Gunter: I am not sure what that means. All I can say is that the T.U.C. and the B.E.C. did not see fit to join in an observer delegation.

Catering Industry (Accidents)

Mr. Edward M. Taylor: asked the Minister of Labour how many accidents occurred to employees in the catering industry in the years 1953, 1958 and 1963, respectively; and how the incidence of accidents in this industry compares with the general incidence of accidents in British industry.

Mr. Thornton: There are no statistics available in our Department, since the Offices, Shops and Railway Premises Act, under which accidents in catering establishments must be reported, only came into force on 1st August, 1964. On the basis of claims for industrial injury benefit made to the Ministry of Pensions and National Insurance, it would appear that the accident rate in the catering and hotel industry, in each of the years 1953, 1958 and 1953, was substantially lower, in relation to numbers employed, than the rate for all industries and services.

Mr. Taylor: As this is one of the most significant and most accident-prone industries in the lighter range, is there not justification for a special inquiry by the Factories Inspectorate into it, and does not the Minister agree that the substantial percentage of old and female labour employed, with the dangers of scalding, bruising and injury from the carrying of excessive weights, gives further justification for such an inquiry?

Mr. Thornton: I repeat that, from the information available, it appears that the incidence of accidents is less than in industry generally. It is rather difficult to make the comparison because of the different types of return rendered to the Ministry of Pensions and National Insurance in past years. We shall now be comparing these and our factory inspectors are giving local authorities guidance about enforcement. My right hon. Friend will be laying before Parliament next year the statistics for the last five months of this year in his first Annual Report under the Offices, Shops and Railway Premises Act. We are concerned that there have been some serious accidents reported, and we think it important that an effective check should be made.

Thorne and Goole

Mr. George Jeger: asked the Minister of Labour how many registered disabled workers are unemployed in Thorne and Goole; and what special action is being taken to find suitable employment for them.

Mr. Marsh: On 9th November, there were 80 registered disabled persons registered as unemployed at Thorne Employment Exchange and 36 at Goole. Our local officers are doing all they can to find them suitable openings.

Mr. Jeger: Is my hon. Friend aware that some of these unemployed men and women are people of high intelligence, and that some of them, having been sent away for special courses of training for re-employment, had the grievous disappointment, on their return, of finding that there was no work for them in the industry for which they had been trained? Will he take special steps to see that local employment officers set about finding work for them in a much


more vigorous way than in the past and, perhaps, consult Remploy about the establishment of a local factory?

Mr. Marsh: I agree that the level of unemployment among the disabled in Thorne is considerably higher than the national average. The main difficulty is lack of light industry and efforts are being made to encourage firms which could provide suitable work to move to the district. I am sure that my hon. Friend will agree that the local employment exchanges are doing all they possibly can in this matter. Remploy factories are intended for the severely disabled, and there are insufficient of these unemployed in the area to justify one being set up.

Docks (Delays)

Sir C. Osborne: asked the Minister of Labour what new action he is taking in regard to the delay in the docks of exports, examples of which, such as footwear needed for the Christmas trade in Denmark, Sweden, Switzerland, Austria, and France, have been given in the correspondence sent to him by the hon. Member for Louth; and if he will make a statement.

Mr. Gunter: On the immediate question of restrictions on weekend working which are contributing to the delays in certain ports, including London, I am seeing the two unions particularly concerned today. On the wider issues, the Committee of Inquiry under the chairmanship of Lord Devlin which has reported on wages will now be examining the subjects of decasualisation, causes of dissension in the industry and other matters affecting efficiency of working.

Sir C. Osborne: I wish the Minister good luck in his interview today and I hope that he gets results, but does he agree that many exporters, such as footwear manufacturers, find that their exports are held up by these irritating delays in the docks and that, if we are to get our exports where we want them, the docks problem must be solved? Would not his right hon. Friend Mr. Frank Cousins do better if he shared the Minister's bed of nails instead of playing with technology?

Mr. Gunter: The last part of that supplementary question was not worthy

of the hon. Gentleman. On the first part, I agree that we must somehow or other, and quickly, find a solution to these problems at the docks. We are bedevilled by history and the mess of generations and I can only say at this point that, once hon. Gentlemen let me off the hook, I shall resume consultations with the union.

Mr. Ridley: Will the Minister ensure that Lord Devlin's Committee has every opportunity to visit foreign docks such as Antwerp and Rotterdam which have had a much more successful record than we have had in many cases in order to try to discover some of their secrets?

Mr. Gunter: I do not give instructions to Lord Devlin or his Committee. I am sure that he will note what has been said.

Mr. Dudley Smith: Does the Minister agree that some of the restrictive practices operated in the docks are the worst in the country, and is not this by far the most urgent problem to be investigated?

Mr. Gunter: The hon. Gentleman generalises again. I do not know whether they are the worst in the country. There are certain other areas of industry which I should want to look at very carefully before saying that about the docks. I am trying to clear up a mess. I do not yet know how to do it, but I am doing my best.

Trade Dispute, Newcastle-upon-Tyne

Mr. R. W. Elliott: asked the Minister of Labour if he is aware that a trade dispute between the Heating and Domestic Engineers' Union and the Plumbing Trades' Union is causing delay in the installation and renewal of heating in schools and colleges in Newcastle-upon-Tyne; and what steps he is taking to resolve the dispute.

Mr. Gunter: Yes. My officers have held meetings with the parties. Unfortunately, these did not result in a settlement. Since then, however, the executives of the two unions have met and I am hopeful that, as a result of their efforts, this dispute will soon be brought to an end. My officers will continue to keep in close touch with the situation.

Mr. Elliott: Is the right hon. Gentleman aware that, as a result of this


unfortunate inter-union dispute, there is now a serious threat to the educational work of the City of Newcastle? Is he aware that this unfortunate dispute on a demarcation point has been dragging on for no less than three months and that, in addition to holding up the installation of heating systems in new educational establishments, in old educational establishments where the heating system was due to be renewed in midsummer the renewal has not yet been done? Will he use his every energy to bring this ridiculous situation to an end?

Mr. Gunter: Yes, Sir. As the hon. Gentleman knows, at this stage the general secretaries of the two unions concerned are doing all they possibly can to reconcile the differences at local level.

Mr. Popplewell: Is my right hon. Friend aware that the district committee will be meeting on 15th December in connection with this dispute? May we be assured that, if it does not accept the respective national executive committees' findings, my right hon. Friend will use his good offices as speedily as possible after the decision on that date is known, as this regrettable dispute has lasted so long and is holding back educational building needed in the city?

Mr. Gunter: Yes, Sir.

Construction Industry, Scotland

Mr. Bruce-Gardyne: asked the Minister of Labour how many skilled and unskilled workers whose last employment was in the construction industry are at present unemployed in Scotland.

Mr. Marsh: At 9th November, 10,364 workers whose last employment was in the construction industry were registered as unemployed in Scotland. Of these, 10,001 were men aged 18 and over, of whom 1,187 were skilled. I regret that an occupational analysis of the remaining 132 women, 224 boys and seven girls is not available.

Mr. Bruce-Gardyne: Would not the hon. Gentleman agree that the impact of the 7 per cent. Bank Rate in Scotland will increase the problem of unemployment in the construction industry there?

Mr. Marsh: I should like to congratulate the hon. Gentleman on his supplementary question. For any Tory to weep crocodile tears about unemployment in Scotland requires a degree of brass-faced cheek which is most impressive.

Mr. Hector Hughes: Can my hon. Friend say how many of the skilled and unskilled workers referred to in the Question belong to the shipping and associated industries in north-eastern Scotland and what steps he is taking to reduce the number by correcting the delusion propagated by the last Government that the north-east of this island ended at Newcastle-upon-Tyne?

Mr. Marsh: I am afraid that my hon. and learned Friend's Question goes rather wider than the original Question.

Payment of Wages

Mr. Bruce-Gardyne: asked the Minister of Labour whether, in view of the number of wage thefts, he will seek co-operation from the trades unions to extend the payment of wages by cheque.

Mr. Thornton: Under the Payment of Wages Act, 1960, the individual worker can decide whether he wants to be paid by cheque. I would not wish to interfere with this freedom of choice.

Mr. Bruce-Gardyne: Yes, but would not the hon. Gentleman agree that the progress in achieving acceptance by the unions of payment by cheque has been highly unsatisfactory since the passage of the Act, and does he not feel that the time has come to urge upon the unions the need for additional use of this procedure?

Mr. Thornton: I am quite satisfied from my experience that the unions generally know what is in the best interests of their members. I should certainly not feel justified in exerting any influence upon them. Bearing in mind ordinary banking facilities and working hours, even hon. Members would be asking for some of their salary to be paid in cash if it were not for the special facilities that we have at the Post Office.

Sir C. Osborne: Would not the hon. Gentleman agree that the best way to stop wage thefts is to punish more severely those who thieve?

North-East Region

Mr. Derek Page: asked the Minister of Labour if, in view of the importance of regional planning and the need for full information on which to base it, he will take steps to publish average weekly earnings of male manual workers in the north-east of England Development Area for a suitable date in 1964.

Mr. Thornton: Figures for the northeast of England Development Area are not available. This area, however, accounts for some 90 per cent. of the insured population of northern region for which figures of earnings of adult male manual workers are regularly published in the Ministry of Labour Gazette and the quarterly publication "Statistics on Incomes, Prices, Employment and Production".

Mr. Page: Is my hon. Friend aware that it is extremely difficult to make comparisons between areas such as the North-East, which are receiving economic aid, and areas such as Norfolk, which may well deserve such aid, because comparative figures are not available? Is he prepared to take steps to secure such figures?

Mr. Thornton: We will certainly keep the matter under review. This is a rather complicated subject, but we will give it our attention.

Factory, Wolverhampton (Closure)

Mr. Julius Silverman: asked the Minister of Labour if he will make a statement on the labour problems caused by the proposed closure of the General Electric Company's factory at Four Ashes, near Wolverhampton; what period of notice the workers affected are under; and what steps he is taking with regard to the matter.

Mrs. Renée Short: asked the Minister of Labour how many workers have become redundant at the General Electric Company's factory at Four Ashes, near Wolverhampton; what period of notice they are under; and what plans he has for assisting them.

Mr. Robert Edwards: asked the Minister of Labour whether he is aware of the decision to close the General Electric Company's factory at Four Ashes, near Wolverhampton, affecting the

employment of approximately 400 work-people; and what action he is taking to prevent the dispersal of the trained labour force.

Mr. Walden: asked the Minister of Labour what provision he is making for workers rendered redundant by the closure of the General Electric Company's factory at Four Ashes, near Wolverhampton.

Mr. Gunter: I am aware of this proposed closure. I understand from the company that of the 758 workers employed on 19th November when the closure was announced some 258 had left by 4th December and that a further 90 had been offered employment at other G.E.C. establishments in the area. A phased redunancy, with the statutory period of notice to each worker, is to take place between 11th December and 26th March. My local officers took advance registrations of 284 workers at the factory last week and have offered a similar service to the remainder. Employment prospects in the area within reasonable travelling distance are very good and my Department will do all it can to assist those who need to seek help in finding other work.

Mr. Silverman: Will my right hon. Friend give the House information on the following points? First, has there been to his knowledge any consultation between the managements and the unions or the workers' representatives in regard to this redundancy? Secondly, is it correct that only two weeks' advance information has been given to some of the men of their redundancy, and that there was an advertisement issued by the factory for fresh labour only eight weeks ago, in consequence of which men gave up other employment and their homes in order to take these new jobs and now find themselves with the prospect of being out of work and without a home? Thirdly, is it true that the largest amount of compensation offered to men who have worked for the firm for 21 years is five weeks' pay, and does this not indicate the need for the Government to press on with all speed with their legislation dealing With redundancy and severance pay?

Mr. Gunter: On the first two points, I understand that there has been bitter complaint from the unions about the


sudden announcement on 19th November, and that bitterness has been expressed about the lack of consultation that took place beforehand. I also understand that there is great feeling about the terms of compensation, which, as my hon. Friend has said, amounts to five weeks' pay for over 21 years' service. The point is that the firm is complying with the statutory requirements of the Contracts of Employment Act. There is little that I can do about it other than to accept the hon. Member's suggestion to press forward with our legislation on redundancy and severance pay. I would add that I have received no representations from the unions on the matter.

Mr. Snow: Are we not here dealing with one of the very great companies of this country? How comes it that a company with all these ramifications and the experience that it should have of relations with employees carries out a policy like this with all its anti-social implications?

Mr. Gunter: I can only say that it is a pity that such things should arise and that we would hope to alter much of them in the term of this Government.

Mr. Robert Edwards: Would not my right hon. Friend agree that it cannot possibly be in the national interest to close a factory of this nature and disperse its highly skilled labour? Could he refer the matter to his right hon. Friend the President of the Board of Trade to see whether the Government might be able to take over the factory and use it for constructive production?

Mr. Gunter: I will take note of what my hon. Friend says in the last part of his supplementary question. In reply to the first part, my information is that the whole of the labour force is not highly skilled and that a large measure of it is semi-skilled.

OVERSEAS DIPLOMATIC COMMERCIAL OFFICERS

Mr. Maxwell: asked the Minister of State for Foreign Affairs if, in view of the fact that British diplomatic representatives abroad are not doing enough to promote British exports, he will take steps to relate their salaries and expenses directly to the achievement of a rapid and sustained increase in British exports.

The Minister of State for Foreign Affairs (Mr. George Thomson): No, Sir. I do not accept that British diplomatic representatives are not doing enough to promote British exports. This is one of their most important tasks and they treat it as such. But actual orders have to be won by exporting firms and organisations.

Mr. Maxwell: As my hon. Friend knows, foreign affairs is about war or trade. Would he not agree that a great deal more of the Department's resources and manpower should be devoted to obtaining increased orders? Would he not further agree that there is a need to increase the status and emoluments of commercial and marketing officers? Finally, would he not also agree that there is a considerable need for market research officers in appropriate cases where our country can achieve a considerable increase in exports?

Mr. Thomson: Commercial officers of the Foreign Office are members of the Diplomatic Service and their salaries and allowances are, as recently agreed under the recommendations of the Plowden Committee, the same as for other members of the Service. Active steps have been taken in recent years to give diplomatic officers doing commercial work the fullest opportunity to train in that work in this country.

Mr. Dodds-Parker: Is the hon. Gentleman aware that, starting with the Labour Government after the war, diplomatic representatives have been playing an increasingly important and effective part in our export trade? Will he point out to them that the implications in the Question and the supplementary question do not represent the opinion of either side of the House of those who are doing this work?

Mr. Thomson: I am grateful to the hon. Gentleman for his tribute to the commercial work of our diplomatic representatives. My Department receives many compliments from exporters about the kind of help that they have received from our commercial officers overseas.

Mr. Loughlin: Whilst not wishing to criticise any members of the existing diplomatic staff, may I ask my hon. Friend whether he does not agree that there is urgent need for an expansion of our staffs abroad on both the technical and the sales sides?

Mr. Thomson: We are always ready to expand the work we do to help British commercial interests overseas but my hon. Friend's supplementary question might be better addressed to the Chancellor of the Exchequer.

Mr. G. Campbell: Will the hon. Gentleman ask the Government, before they increase their own salaries, not to make our diplomatists' tasks more difficult by surcharges and other irritations which have antagonised almost every other country?

Mr. Thomson: That is quite another question. There are questions on that subject on the Order Paper later.

INDONESIA (BRITISH-OWNED PROPERTIES)

Mr. Edward M. Taylor: asked the Minister of State for Foreign Affairs what is the extent to which British-owned rubber estates and other properties in Indonesia have been affected by compulsory acquisition in consequence of the policies of the Indonesian Government.

Mr. George Thomson: By a Degree dated 26th November, the Indonesian Government officially confirmed that all British-owned commercial interests in Indonesia, including rubber estates, had been placed under complete and direct Indonesian management and control.
Accordingly, on 1st December, Her Majesty's Ambassador at Djakarta delivered a note to the Indonesian Department of Foreign Affairs stating that this Decree, when taken in conjunction with Indonesian public statements of intention, appears to amount to de facto expropriation, and reminding the Indonesian Government that, when property has been expropriated, there is an obligation to provide compensation in accordance with international law.

Mr. Taylor: Is the hon. Gentleman aware that there are about £200 million worth of British assets in Indonesia and that for many years these companies have been subjected to savage taxation and unreasonable trading conditions? Is he aware that if strong economic retaliatory action is not taken it will merely encourage other countries to solve their financial problems by expropriating British property?

Mr. Thomson: It is very difficult to put a figure on the value of the assets

concerned, but our estimate is that it is well over £100 million. It is not the policy of the Government to indulge in retaliatory expropriation. In any case, we believe that by this kind of action the Indonesian Government are likely to do themselves a great deal of economic damage.

Mr. Shinwell: Is my hon. Friend aware that I and other right hon. and hon. Members on both sides deplore this country being pushed around by Indonesia or any other country? Nevertheless, can he tell me whether these expropriations have taken place since the Labour Government took office?

Mr. Thomson: Yes. In my Answer I stated that the decree was dated 26th November. But I agree with my right hon. Friend's general point of view. Certainly, Her Majesty's Government are not to be deterred by this kind of action from supporting our Commonwealth ally, Malaysia, in face of the acts of aggression against her by the Indonesian Government.

Mr. Shinwell: For purposes of accuracy, will my hon. Friend inform the House whether similar action has not been taken by the Indonesian Government before 26th November?

Mr. Thomson: I beg my right hon. Friend's pardon. I misunderstood his original supplementary question. Of course, this is only the latest of a number of actions of a similar character carried out by the Indonesian Government.

Sir A. V. Harvey: Will the hon. Gentleman convey this Question and Answer to the Prime Minister in Washington and ask him to discuss this matter with President Johnson to see whether the United States will withhold the aid it is giving to Indonesia and back this country up in some commercial matters?

Mr. Thomson: I am sure that the affairs of South-East Asia will figure in the Washington conversations.

Oral Answers to Questions — UNITED NATIONS

Charter (Article 19)

Lady Tweedsmuir: asked the Minister of State for Foreign Affairs whether he will make a statement on Her Majesty's Government's policy towards


the use of Article 19 of the United Nations Charter, which deprives member States of their vote if they are over two years in arrears with their financial contributions to the Organisation.

Mr. Wall: asked the Minister of State for Foreign Affairs what instructions are being issued to the United Kingdom delegation at the United Nations with regard to the voting rights of the Union of Soviet Socialist Republics under Article 19 of the Charter.

Mr. George Thomson: Her Majesty's Government's policy is to work for a settlement of the Article 19 issue in accordance with the United Nations Charter. We consider that under that article States two years or more in arrears with their contributions have no vote in the General Assembly. I ought to emphasise that we do not regard this as an East/West confrontation but as a question of principle under the Charter of the United Nations, the authority of which must be upheld if the rule of law in international affairs is to be maintained and the United Nations effectively strengthened.

Lady Tweedsmuir: Will the hon. Gentleman say what kind of proposals for a compromise he is considering, since he has stated acceptance of the principle of the International Court's judgment so clearly? Will he also state the Government's attitude to the 59-nation Afro-Asian group's suggestion for shelving the matter indefinitely in order that the General Assembly may both vote and work?

Mr. Thomson: The Government and my noble Friend, Lord Caradon, are doing all they can to assist in getting a settlement of this matter in accordance with the principles I have just described. This matter is under active negotiation in New York at the moment and I would not wish to say anything which might prejudice those negotiations.

Mr. Wall: Will the hon. Gentleman say whether it is the Government's expectation that this matter will be settled during the present General Assembly session?

Mr. Thomson: We all hope that it will be settled, because Her Majesty's Government are very anxious, as I hope to explain to the House a little later, to

enhance the peace-keeping operations of the United Nations, and this must be the first step towards that.

Security Council Resolution (Expert Committee)

Mr. Longden: asked the Minister of State for Foreign Affairs whether Her Majesty's Government have submitted their views to the Expert Committee which was established by the Security Council Resolution of 18th June, 1964, and of which the United Kingdom is a member; and whether they will now communicate those views to the House.

Mr. George Thomson: Her Majesty's Government are taking a full part in the work of the Committee and are expressing their views on all questions as they arise during the Committee's work. We shall also be answering, both on our own behalf and on behalf of our dependent territories, the Questionnaire sent to all members of the United Nations by the Committee. The Committee has decided that its proceedings shall be confidential. I cannot therefore disclose at present the contents of these replies.

ANGLO-ARAB RELATIONS

Mr. Jackson: asked the Minister of State for Foreign Affairs whether, in view of the prospects for improved Anglo-Arab relations, he will make an early official visit to the Arab world.

Mr. George Thomson: We have the possibility of a Ministerial visit to the area very much in mind, but no decision has yet been taken.

Mr. Jackson: I thank my hon. Friend for that reply, but will he bear in mind that there have been certain important developments there, such as the new Government of Saudi Arabia, the changes in the Yemen and our relations with Libya, which would make an immediate visit both necessary and important?

Mr. Thomson: We have all these matters very much in mind.

Mr. Fisher: Will the hon. Gentleman also bear in mind that the recent bomb outrages in Aden were almost certainly Egyptian-sponsored? Will he make representations to President Nasser that


if he wants better relations with this country, this is not the best way to set about it?

Mr. Thomson: The whole House will deplore the use of violence in Aden in recent days. The authorities of the U.A.R. are already aware of our views on this matter and any other similar matters which might cause difficulties in our relations, and these will be much in our minds when considering the idea of a visit to Cairo.

Sir B. Janner: Will my hon. Friend take into consideration when arranging such visits the serious war declarations made time and again by Arab States against Israel, including the recent resolution in Alexandria, and point out to them that these are quite contrary to the United Nations Charter and cannot possibly be tolerated?

Mr. Thomson: One of the purposes in seeking better relations with the States of the Arab world is to contribute to a more stable situation in the Middle East as a whole. The Foreign Secretary had an opportunity to talk about these matters with the Deputy Prime Minister of Israel when the latter passed through London recently on his way to New York.

BUSINESS OF THE HOUSE

Ordered,
That, notwithstanding the provisions of paragraph (1) of Standing Order No. 100, the Proceedings on the Motion relating to Ecclesiastical Areas (Reorganisation) may be entered upon at any hour, whether before or after half-past Eleven o'clock; and that not later than one hour and a half after the commencement of such Proceedings Mr. Speaker shall forth-with put any Question which may be requisite to bring to a decision any Question already proposed from the Chair.—[Mr. McCann.]

UNITED NATIONS (REFORM)

3.30 p.m.

Mr. John Tilney: I beg to move,
That this House, noting the faults and successes of the United Nations and the view of its Secretary-General that, if it is to have a future, the United Nations must assume some of the attributes of a State, in particular the means to act in areas of actual or potential conflict, calls attention to the need for reforms in the United Nations in particular by the creation by like-minded States, as suggested by the Prime Minister of Canada, of a small peace-keeping force on a permanent basis.
Next year the twentieth anniversary of the signing of the United Nations Charter will be celebrated. Therefore, thought is now being given to the United Nations. It has grown from its original strength of 51 nations to the 115 of today. I believe that both sides of the House hope that U Thant's treatment in hospital will soon see him about fit and well again. [HON. MEMBERS: "Hear, hear."] There are many, however, who are wondering whether some treatment should be given to tthe United Nations itself.
How far has Hammarskjold's view that the United Nations should be
the dynamic executive instrument to resolve and avert conflicts
succeeded? I think that we all know the answer to that. Yet world order is surely the only hope for mankind. We either have to adapt today's potential or perish like the overscale reptiles of another age, and all that may be left of our civilisation is the fossilised promise of the present.
I still believe that the Defence White Paper of 1958 was right when it stated, in paragraph 8:
The ultimate aim must be comprehensive disarmament by all nations, coupled with comprehensive inspection and control by a world authority. Nothing less than this makes sense. That may seem a long way off. But it is just as well to recognise it and proclaim it as the final objective.
I believe that my object today is easier than that, for, in the words of Burke,
… as it is the interest of government that reformation should be early, it is the interest of the people that it should be temperate. It is their interest, because a temperate reform is permanent, and because it has the principle of growth. Whenever we improve, it is right to leave room for a further improvement.


Although world order may seem a long way away, the flashpoints of anarchy are all round us and, I believe, should be dealt with now.
Before I say what I think might be done, it is worth while looking at what the United Nations is today. It certainly shows no signs of being a world Government. It is more like a colosseum of competitive national views. It is slow to act; it is pulled this way and that, it is a mass of lobbies and horse trading. Yet what some regard as the T.U.C. of Governments is still the most likely weapon of hope for man. Because it is the wish of major Powers not to be done down by little ones, the veto remains with the five permanent members. It has been used three times by this country, four times by France, and no fewer than 102 times by the U.S.S.R.
No divided State like Germany or Vietnam can become a member of the United Nations. China, with one-fifth of the world's population—how can one plan the future without such a Power?—is represented by Formosa. Yet that Pacific Island—and, if the majority of the 10 million people in that island wish for separate status I have no objection to it—has the veto. It is rather as if the House of Commons were controlled by the remnants of the Duchy of Normandy, in the English Channel.
It therefore seems to me that the United Nations is a long way from being either universal or united. It is also very hard up. It is rather in the position of the impoverished nephew dependent on rich uncles who like either to disclaim relationship or refuse to pay what they should pay under legal covenant. On 30th September this year the arrears for the special account of the United Nations emergency force and the ad hoc account for the United Nations operation in the Congo totalled, in United States dollars, 112·3 million. The organisation's cash resources totalled 24·8 million, and its deficit was 113·3 million.
Who should lose the vote through default is now an immediate issue. I, like, I believe, the whole House, was pleased to hear the Answer given earlier today by the Minister of State for Foreign Affairs about the views of Her Majesty's Government on this matter. One is pleased that as yet there has been no fundamental break, but I for one believe

that covenants should be honoured. Perhaps countries would be readier payers if the insurance value of the United Nations were to be improved. However, I believe that it would be wrong not to mention the successes of the United Nations. It has acted as a safety valve and as a conciliator. It could be said that without it we might have had a major war. Largely in the guise, or uniform, of America, it certainly saved South Korea. It saved faces over West Irian and over Suez.
In 1957, when the present Lord Privy Seal was Chairman of the Commission, on which also sat Vice-Admiral Hughes Hallett, the hon. and gallant Member for Croydon, North-East in the last Parliament, and the present Chancellor of the Exchequer, an all-party pamphlet was produced by Federal Union in which these sentences appeared:
If a permanent force had been available in October, 1956, to be sent to Sinai as soon as the war started, an armistice would probably have been agreed immediately by Egypt and Israel, and there might have been no Anglo-French intervention. Indeed, had the Israelis been able to call on effective United Nations protection against possible attack, they could hardly have claimed any justification for their offensive.
The various agencies of the United Nations have also had successes, but, despite the reputation of the major ones, like the I.L.O., F.A.O., U.N.E.S.C.O., and W.H.O., there are still 700 million illiterates and the population explosion of the world goes on. Possibly the most successful agency is the World Bank and its financial associates. Yet still there is no investment code and no scheme to insure what new private capital may be invested in developing countries. The great gap between the rich and poor countries is as wide as ever. I believe that it is true to say that all the loans so far made by the World Bank amount to less than one-tenth of the world's annual expenditure on arms.
It is as well to bear in mind some of the failures of the United Nations. It has not as yet freed succeeding generations from the scourge of war. The balance of terror, and not the United Nations, keeps the peace. It has failed to take action in places like Berlin, Cuba and Hungary, although it has succeeded with U.N.E.F. in guarding the frontiers of Israel with the Arab world and, to begin with, in the Congo with


U.N.O.C. I wonder whether, if United Nations troops had still been there or if there had been today some emergency force, the recent massacres in the Congo would ever have taken place.
The United Nations has also helped in the Middle East, in Laos and in Cyprus, but none of these actions has been an unalloyed success because they have been largely symbolic and part of the forces concerned have been withdrawn at the whim of the national Government concerned. Only a permanent force can prevent this. Nor has the United Nations replaced war by law—by a law that should be known in advance and enforceable upon corporations and individuals as well as upon governments.
I believe that the powers of The Hague Court should be strengthened. There is as yet no international habeas corpus act and little sign of getting one. In international affairs, the individual is forgotten. Therefore, the United Nations, which is no world Government, is no international Parliament, either.
The representation on the United Nations is odd. One hundred and eighty thousand Icelanders have one vote, so have 440 million Indians. The U.S.S.R. has three votes—Russia, White Russia and the Ukraine—whereas the United States of America, with 50 states, has only one. We are told that this is for historic reasons. Somehow, it seems to me, history will have to become less square. Because of these difficulties the United Nations lacks power, although, admittedly, it has a considerable moral influence.
What, then, are the major defects which could be rectified in the set-up of the United Nations as it is now? They are, first, lack of finance, and, secondly, lack of a ready police force. Some country should take the lead in trying to remedy both gaps and I hope that that country will be Great Britain.
First, as to finance. The United Nations is never certain of its income. I agree that the bulk of its revenue should come from member countries, but some revenue could come to it as of right. With so many nations now laying claim to vast new territorial waters, the whole concept of the high seas seems to be in jeopardy. It is, surely, a British interest

to prevent the closing rights of way between oceans.
The doctrine of the high seas is really one of anarchy. Any action can use them, as any man in Saxon times could use the common land. Instead, however, of hunting, as we do today, the seas, quite soon we may be farming them and also exploiting the seabed. Why not do so beyond territorial waters by licence from the United Nations? This would save a lot of quarrels in the years to come.
Is it impossible to make a small levy on the increase of world trade through either the world's canals or international airports or in some other way? All except those countries which want to see chaos have an interest in building up some such orderly finance.
Even more important is the power to act swiftly. In four places this year—Tanganyika, Kenya, Uganda and Cyprus—British troops did a first-class and quick job, but I wonder whether all white faces would be acceptable there should the occasion again arise. Many other areas there are, too, of potential unrest. Should they explode, what action could the United Nations take? What could it do to help Malaysia?
The United Nations has no troops of its own, no power to administer territory and no military staff college. Any ad hoc United Nations force has no agreed common language, no military planning and staff group, no standard regulations and, above all, no standard terms of reference or operating orders. All the basic rules for such should be agreed now and incorporated in a statute.
Canada, Denmark, Finland, Holland, Iran, New Zealand, Norway and Sweden have said that they are willing to earmark troops for the United Nations, but unless these troops train together they will not be very effective. To that end, I welcome the recent action to improve efficiency by the holding of the 21-nation conference in Ottawa on the technical aspects of United Nations peace-keeping operations.
In any event, how can we visualise disarmament, the agreed principles of which were accepted in the U.S.S.R.-U.S.A. joint statement of 1961, until at least an embryo international peace force has come into being?
Is it not time to look at the views of Mr. Lester Pearson, the Prime Minister of Canada, as they appeared in the magazine Maclean's of 2nd May this year, when he said:
… in 1945, when the United Nations was born … we were inspired by high hope and, for a few brief but brilliant days, felt that perhaps this time we had learned the tragic lessons of earlier failures, and that international force behind international law might be established to save the world from another such scourge as that of the Second World War.
The United Nations Charter seemed a better instrument for this purpose than the League. It gave the Security Council power to make decisions and enforce them. The members of the United Nations undertook to make armed forces available to the Security Council. These forces were to be organised collectively under a military staff committee.
—a military staff committee which met on 29th October this year for the 507th time merely to drink sherry and to adjourn because
The Soviet veto destroyed the usefulness of the Security Council in maintaining the peace.
Why? Does the U.S.S.R. fear imperialist intervention in another guise? It is, surely, in Russia's interest, as it grows richer, to reduce the danger of little wars which might so easily grow into large ones.
After referring to the birth of N.A.T.O., Mr. Pearson went on to say—and I quote three brief extracts:
There is similar need for a new initiative today, but one to be taken inside the United Nations itself. If the United Nations Assembly, as such, refuses to take that initiative—if it is unable to agree on permanent arrangements for a 'stand-by' peace force—then why should a group of members who feel that this should be done not do something about it themselves? Why should they not discharge their own responsibilities individually and collectively by organising a force for this purpose, one formally outside the United Nations but ready to be used on its request? …
The forces provided could only be called into action on the request of the United Nations through a resolution passed for that purpose. But the forces would be ready for such a call …
Cyprus has once again demonstrated the need for a high degree of preparedness.
If there was a small international police force, national Governments would be less likely to have to allocate their own forces, which in many cases are stretched to the limit, for the United Nations. To

start with, in any permanent United Nations force troops would, I agree, have to be allocated by individual nations, but, as the Congo showed, these troops can often be hurriedly withdrawn either because one nation which has contributed troops does not agree with the decisions of the United Nations, or because there is an internal crisis at home.
In the end, I believe that the world will have to have an individually recruited, permanent, multi-racial—on the lines of the old French Foreign Legion—multi-coloured force serving on long-term engagements, highly paid and honoured. It will have to be very carefully chosen if it is to be the corps d'elite of the world's regiments. But nations which agree—and this does not only apply to the minor Powers—to allow their own nationals to volunteer for recruitment should do so on the understanding—and this must be made quite clear—that those individuals should never be called upon, or could refuse, to fight with their kith and kin. It is from these nations that we shall have to build up such a force—but it will take a long time.
Meanwhile, like-thinking nations, that is those who believe in establishing such a force, will have to allocate some of their own troops. Control is the major problem. A comparatively small force of, say, 20,000 men—that size of force could not unbalance the present world order—could affect the politics of some small individual States. Therefore, it should never be used except by request of the legitimate Government which might fear a coup d'etat by subversion or a direct attack by a hostile neighbour. It should never be used, I submit, except for a short time, while an election could be held, to bolster an unpopular régime. There are, I must admit, many difficulties. But even with such provisos, the Secretary-General may not be given power by the United Nations to allocate the troops in time.
Yet what is the alternative—the drift to anarchy, the little conflicts which might engulf us all? I believe that this is not a cloud-cuckoo-land scheme. It does not pretend other than to cope with more than small posses of unrest. But a nation should make a start to try to cope with these international problems. No


nation, so far I know, in the great forum of the United Nations has been prepared to say, possibly for fear of being voted down or scoffed at unofficially. "This is what we believe". I believe that it is time that Great Britain did.

3.53 p.m.

Mr. E. L. Mallalieu: May I use two of my precious minutes to say how grateful I am and, I believe, a great many other hon. Members are to the hon. Member for Liverpool, Wavertree (Mr. Tilney), who has made a speech of very considerable importance to the House. We are grateful to the hon. Member for bringing this matter before the House, and also happy with him that he has the chance today to do that so early in this Parliament, and grateful also for the particular quality of his speech. It was one, I feel, that will be long remembered here.
I can only say that almost equal to the joy that I feel in seeing the hon. Member standing up and saying that from the other side of the House is my gladness that there should be sitting on the Front Bench on this side of the House one who, I believe, will match what has been said not only by equal words and thoughts, but by all the power of action that he has at his command.
The hon. Member for Wavertree has been talking to us about a police force. I wonder if I might, first, for a very short time, try to separate two ideas which there are about a world peace force. Like the hon. Member and like so many other people in so many countries throughout the world, I believe that there is no real hope of establishing peace—a secure and stable peace—unless we arrive at a state of general and complete disarmament of sovereign States.
We have all been trying to achieve just this for very many years. I would submit to the House that instead of going baldheaded for disarmament in disarmament conferences, there is a much more practical way of arriving at the same result, or rather the result that we hoped to arrive at by the conferences but have so far failed to arrive at, and it is the line set up by the hon. Member.
Unless we can get an alternative system of security ultimately to that of arms, no sovereign State will disarm. I think that we all more or less accept

that now. Yet, we are not arriving at this alternative system and that is where the importance of the hon. Gentleman's suggestions to us this afternoon comes in. He is saying that, ultimately, we must have a permanent United Nations or world force to enable disarmament to take place and to keep the peace thereafter, but he is saying that, in the meantime, if we are not yet able to arrive at that state of affairs, let us make a beginning of the march on the road towards that goal.
Let us see if we cannot arrive at a practical system of a world force which will be operative, certainly I would say not to avert a world war in cases where the great Powers are confronting each other, but in an infinitely smaller field as a first step; in the field, that is, where there is a trouble spot in the world and where the Government of that trouble spot invite in the United Nations.
What are the conditions upon which such a force might well be brought into being in the very near future. Because I believe that that is possible—I believe that that is the position—in spite of the past experience in regard to the general staff committee at the United Nations. What are those conditions? Are they not just those same conditions which will ultimately have to obtain when we do have the real world force permanently in existence, individually recruited, owing its allegiance to the world?
Just the same conditions as that force will have to have ultimately will apply also in this first step. There will have to be a law under which that ultimate force will work, a world law which will have to apply not only to Governments, as international law does at present, but to individuals, so that if you are armed, or manufacturing arms, contrary to the decision of the world in this matter, you, as an individual, will be able to be taken up. But that is the ultimate, as I say. There must, even in that ultimate case, be a world law which the force will operate and under which it shall operate, and world courts as well.
These three things are inevitable ingredients in the bringing together of this final world force, but I submit that even now, with this much more limited force, it is necessary to have these three things, the law, the courts, and, of course, the


force. We are talking about setting up the force at the present time.
Take, for instance, the case of Cyprus. How much more easy it would have been for, for instance, the Irish Government to have said, "Of course we will send in troops immediately" had they known what those troops would have been in for when they got to Cyprus, had they known whether or not it was to be permissible for them to disarm people who were obviously thwarting, or, at any rate going against the object of the United Nations' presence in that island; if they had known that they were able to disarm Greeks and Turks under a pre-existing law, a world statute agreed to by all the Governments in the United Nations. Had they known that they would have said at once, "Of course, here are our troops. Send them in." Whereas, as is well known, they had some very proper hesitations about sending their troops in again, as they had done in the Congo, without knowing in advance what they were in for.
And, too, the Government of Cyprus would have had a very much clearer idea of what they were in for, in inviting in the United Nations, had there been this law beforehand.
I submit that the very first thing that the United Nations will have to tackle—that is to say, that we, and our allies, colleagues, friends, whatever they may be called, in the United Nations, all shall have to tackle—is the arrival at an agreement at this minimal world law under which the world's force shall operate. I believe that it would be a quite simple law, in theory, though probably it would be rather long in practice; and, in effect, it would say there that is to be no violence, and that there is to be no possession of arms in the areas to which it applies—for instance, in Cyprus, if it were invited there; no possession of arms without the permission of the central world authority. If it were something of that order I believe that it would be effective.
Now it is said that because, in times past, the Russians have used vetoes about this sort of thing, because the staff committee has not succeeded in doing anything more important than drink sherry—which I, unfortunately, have to admit is the case—there is no hope now that things could be done if a real lead were made by a powerful Government, an

influential Government, morally or militarily powerful, or, indeed, by a whole number of perhaps individually less significant Powers.
I believe that that is not so, and I call in aid for this purpose the results last Easter of the Inter-Parliamentary Union conference, in Switzerland, which was confirmed by the meeting of the Inter-Parliamentary Union this year, in Copenhagen. At those Easter conferences of the Inter-Parliamentary Union there was taken into account a report by a commission of six representatives from six member countries of the Inter-Parliamentary Union, a report which was a result of many days' work and intensive study of just this very thing. One of the most important members of that six-man commission was none other than the Russian delegate, a highly distinguished judge who has attended Inter-Parliamentary Union meetings for many years now.
That commission adopted unanimously a resolution which I have drawn to the attention of the House before. It is very short, and I should like to bring it to the attention of the House again. It said this:
Considering that it will eventually be necessary"—
"eventually", that is the second stage of the world force—
to arm the world force as part of an agreement for general and complete disarmament of sovereign States; secondly that in the meantime the United Nations must have at its disposal a unit composed of legal, military, and technical persons capable of being sent in accordance with the Charter and with the agreement of the Governments in the troubled areas to those areas when they present a danger to peace: Calls upon the Secretary-General of the United Nations to take the necessary steps in conformity with the provisions of the Charter (1) For the appointment of key persons to make plans for its operation and form the cadres from which from time to time may be added military and other effectives made available to it by member States; (2) To establish a statute immediately under which such a unit should act".
That is the whole doctrine both as to the first stage and as to the ultimate stage which has just been put so eloquently before us by the hon. Gentleman; and it was agreed to by the countries behind the Iron Curtain. In those circumstances it just cannot be said that this is Utopia. This is something right down to earth.
I submit to the Government—I do not think I need to press them, but I think that I can tell them this—that the whole


world is watching waiting to see what will happen at the United Nations, because it believes, as I do myself, that we really are on the edge of using this machinery to the fullest extent to which it is capable of being used. The people in many countries of the world—the Association of World Federalists, of which I have the honour of being the General Secretary, in The Hague, with no fewer than 2½ million paid adherents in Japan alone, and with branches in countries all over the world—are looking to the Government to see that our feet are set firmly on this road towards the ultimate goal of the law, the courts, and the power in the world force.
I believe that if the speech of the hon. Gentleman were followed, and real efforts were made now at the United Nations to take these first halting steps in that direction, the hopes of mankind in the present Government would be justified.

4.9 p.m.

Sir John Fletcher-Cooke: I rise to intervene in this debate with the usual measure of trepidation and craving the customary indulgence of the House, which the House is wont to accord to those who speak here for the first time.
I am proud to represent one of the two constituencies, the one called after the River Test, into which Southampton is divided. Southampton, which was raised to "the title and dignity of a City" by Her Majesty the Queen on 11th February this year, has had a long and honourable history, too long to recount to the House; but I may perhaps be permitted to refer, as a background to what I shall say later, to one or two of the highlights of the history of Southampton.
The city has always had close contacts with the Continent of Europe, from the days of Claudius, when the Romans built a settlement and port connecting up with their communications network on the Continent. Under the Normans, these continental connections and associations were strengthened and extended. In Tudor times, Southampton's contacts with the outside world spread even further afield.
I need not stress Southampton's share in the subsequent development and opening up of what is now the Commonwealth and the new world across the Atlantic; and, for fear of giving offence

to hon. Members who represent the great sea port of Plymouth, I will not dwell on the contention that it was from Southampton that the Pilgrim Fathers set sail, merely putting in at Plymouth to replenish their supplies.
More recently, Southampton made a vital contribution to the national effort in both World Wars, though payment was exacted for this in the shape of considerable damage caused by heavy Nazi bombing
It is against this background of my constituents' contact with and lively interest in the world outside that I am emboldened to make this debate on the United Nations the occasion for my maiden speech in the House.
But first, Mr. Speaker, I must record the great pride which Southampton takes in the fact that my friend, the hon. Member for Southampton, Itchen (Dr. Horace King), has been elected as your Deputy. My only regret is that this evidence of the House's collective wisdom has deprived me personally of a regular pair, which would, indeed, have been very convenient, having regard to the many and varied civic occasions which take place in Southampton.
I stand here, Mr. Speaker, as the successor to Mr. John Howard, who is known to many hon. Members on both sides of the House. But I can assure you that it was hardly a source of encouragement to me when I came to know that the strains and stresses of representing Southampton, Test for nearly 10 years had so impaired Mr. Howard's health that he felt unable to contest the last election. I am sure that hon. Members on both sides of the House will wish him a speedy and complete recovery.
I have indicated that the growth and prosperity of Southampton has been built up over the centuries as a result of its contacts and connections with developments overseas, and it is, therefore, natural and appropriate that its citizens should be deeply interested in the wider world beyond our shores. This is reflected in the existence in Southampton of an active and virile branch of the United Nations Association, of which branch I have the honour to be a vice-president.
But there are other reasons, too, why I think that it might be appropriate for me to make my maiden speech in this


debate. The first is that I noticed, while listening to other maiden speakers from both sides of the House, that the majority of hon. Members present were those who had not yet made their maiden speeches, and I felt that if I deferred my maiden speech too long I should find myself addressing a virtually empty House. Indeed, the attendance today suggests that I have perhaps under-esti mated the number of those who have already made their maiden speeches.
The second reason is that I have had the privilege as a civil servant of representing the Government of the day as a member of our mission to the United Nations during two periods since the end of the war. The first period, between 1948 and 1951, was under the previous Labour Government, and the second period between 1957 and 1961, was under the previous Conservative Government.
I must confess that I could not detect much difference in the attitude of those two Government to the United Nations and their approaches to its problems. Indeed, the only difference which I can recall is that at the General Assembly in 1949—on 15th November of that year—none of the Labour Ministers or Members of Parliament who made up the United Kingdom delegation to that Assembly found it convenient to address the plenary meeting of the General Assembly held on that day, and it fell to me, as a comparatively junior civil servant, to speak for His Majesty's Government in plenary session on a matter of policy, an occasion, I must say, which I found far less daunting than addressing the House.
Under the present Government, of course, no such situation would ever be allowed to arise, for the Government believe that the influence of Britain at the United Nations can be strengthened by representational changes purporting to signify that they attach greater importance to the United Nations than did their predecessor. I venture to doubt the validity of this belief, for it is surely what we say and do at the United Nations rather than who says it and does it which will indicate the measure of importance which this country attaches to United Nations' affairs.
I turn to offer some thoughts on the substance of the Motion. The Charter of the United Nations is a written document, and it is nearly 20 years since it came into force. During those 20 years the world has changed out of all recognition, and yet the Charter has never been formally amended as provided for in Chapter 18. This gulf between the provisions of the Charter and the world in which we live has widened ominously. It is true that certain changes in the practices and procedures of the United Nations have occurred during this period to take some account of the growing disparity between theory and reality. But this piecemeal process has totally ignored some fundamental changes in the world situation, and where it has taken account of other changes, it has perhaps created more problems than it has solved.
Perhaps I may be permitted to draw attention to a number of fundamental weaknesses in the organisation of the United Nations today and to suggest that, while all these weaknesses call for early remedies, some stem from the fact that the Charter has not been amended at all, while others flow from the fact that it has been informally amended without considering all the implications.
The Charter of the United Nations is popularly regarded as being a radical and forward-looking document. Many consider it as more appropriate to a day which has not yet dawned than to the circumstances which prevail in the world around us. But I personally believe that many of its weaknesses derive from the fact that it is not forward-looking enough and that much of its spirit and many of its provisions are too firmly rooted in nineteenth century thinking to make it relevant to the second half of the twentieth century. It is unrealistic not because it foreshadows a reality which has not yet arrived, but because it reflects a reality which has long since passed.
Perhaps I may give some examples. It must never be forgotten that the final draft of the Charter was completed before the first atomic bomb was dropped on Japan, and thus those parts of the Charter which deal with the use of armed force to maintain or restore international peace and security—and the key word is "international"—can have a relevance only in the world which came to an end on 6th August, 1945, when the first


atomic bomb was dropped on Hiroshima, not far from where I was involuntarily residing at the time.
Indeed, most of the articles of the Charter dealing with military matters suggest a leisurely deployment of forces during a nineteenth century campaign rather than the realities of the thermonuclear age. The air is full of the pungent smell of horse manure rather than the acrid stench of incineration. Here is one sphere which calls for early examination, though the difficulties are very great indeed.
There are other parts of the Charter which are, perhaps, even more out of touch with reality. It is clear that the founding fathers of the United Nations never foresaw the speed with which the new nations of Asia, Africa and the Caribbean would break on the world. They certainly did not contemplate that in 1964, 20 years after the organisation came into being, territories which were not even independent nations at that time would form the majority of the member States of the U.N.
Nor can they be blamed for this, for those articles of the Charter which deal with trust and non-self-governing territories contemplated a far more leisurely progress towards independence than has occurred. When the drafters of the Charter included such phrases as
Progressive development towards self-government or independence as may be appropriate
and when they indicated clearly that economic, social and educational advance should form integral parts of the move forward, they undoubtedly had in mind a long-drawn-out process which would ultimately produce a steadily increasing number of new States possessing the basic characteristics of those States which had attained nationhood in the nineteenth century.
Two of those characteristics are of vital importance, and I will return to them. They are, first, the power to preserve law and order internally, and, secondly, at least a reasonable measure of viability economically.
I turn now to one of the informal amendments of the Charter to which I have already referred, namely Resolution No. 1514 of 14th December, 1960, which provided, inter alia, that

Immediate steps shall be taken in trust and non-self-government territories or all other territories which have not yet attained independence, to transfer all powers to the peoples of those territories without any conditions or reservations
The same resolution included the following passage:
Inadequacy of political, economic, social or educational preparedness should never serve as a pretext for delaying independence".
Bearing in mind the circumstances prevailing in 1960, and taking account of the head of steam which had been built up over the rush to independence at that time, there is, perhaps, something to be said in favour of those who sought to bring the United Nations in touch with what was actually happening, for it must be admitted that, rightly or wrongly, the more gradual approach as set out originally in the Charter had long since been abandoned.
Those who took that line—perhaps because they chose to do so by a hasty resolution of the General Assembly and not by means of a deliberate and considered amendment of the Charter, which might have revealed some of the consequential dangers—were basing their good intentions on a fallacy. The fallacy is this.
Just as the United Nations started as an organisation which was dominated by the West, so, too, the Charter is essentially a Western document. It was drafted and sponsored by those who live in and belonged to a Western environment. Because of this, it embodies the Western concept of the sovereign independent State. This is reflected not only in the name "United Nations", but in almost every article of the Charter, particularly in Article 2(7).
This Western concept of a sovereign independent nation State, as it developed during the eighteenth and nineteenth centuries, was regarded as the ultimate in political thinking. But surely it is true that the newly independent States of Asia and Africa do not fit neatly into this matrix. They are fundamentally different from their earlier counterparts in the West. They differ in many respects.
I will touch on only three of the fundamental differences. The first is that the earlier Western-type nation States were, for the most part, mono-cultural. "We who belong" were quite different from "those who do not belong".
Greeks emphasised their Greekness, Germans their Germanness. Each had markedly different characteristics which they emphasised to distinguish themselves from others. But the vast majority of the new States are multi-cultural. Indeed, many are multi-racial as well. In Africa, for example, Tanganyikans—and Tanganyika embodies a wide variety of cultures—do not go about emphasising how different they are from Nigerians or Senegalese. On the contrary, they take great pains to emphasise what they have in common as Africans.
The second difference is that almost all of the Western-type nation States came into being as the result of the application of organised force. From the war of American Independence down through the wars of Greek, Italian and German liberation—including the wars of liberation in Latin America—military force was the midwife at their birth. But there are no African or Asian George Washingtons, Garibaldis or Bismarcks. They have no great indigenous military father-figures. This absence of a military tradition associated with the coming of nationhood, though it has had undoubted advantages, has, I suggest, also had a profound influence on the internal cohesion of these new nation States.
The third difference is the idea of fixed geographic frontiers, which is essentially a Western idea. Those who inhabit the new States have for centuries had a healthy disregard for man-made boundaries. Their concept of a political unit is far less geographical than ours in the West. The various attempts at unions in West Africa, unsuccessful though they have been, the various transformations through which the United Arab Republic has passed, and even the Union of Tanganyika and Zanzibar represent attempts at political groupings which have no counterpart in the Western world, with its insistence on a single focal point of sovereignty covering a particular and well-defined geographical area.
As a result of this and other factors, the new sovereign independent States are faced with fundamentally different problems from those facing the older sovereign States, particularly as they have been encouraged to come into being as separate political units at an earlier stage of economic, social and educational development than was originally contemplated by the Charter.
The fallacy underlying the intentions of those who accelerated this process was to assume that political independence would automatically give them all the characteristics and cohesion of the older sovereign States. But the distinguishing features which I have enumerated, coupled with the acceleration in the move to nationhood, have given rise to two problems which are not normally found in the older nation States, however large or small those may be, namely, difficulties in preserving internal law and order and lack of resources to get off the economic launching pad.
The United Nations, which is largely responsible for creating these problems, must face up to the need for remedying them. I believe, therefore, that in the not too distant future the Charter will have to be amended to take formal cognisance of these and other facts. But, until that can be done, attention should be focused, as is suggested in this Motion, on taking steps to create a United Nations peace-keeping force on a permanent basis.
My right hon. Friend the Leader of the Opposition, when he addressed the General Assembly of the United Nations as Foreign Secretary on 1st October last year, made that point very clearly. Since then, recent events, as my hon. Friend the Member for Wavertree has pointed out, in East Africa, in Cyprus and in the Congo have underlined the need for this as a matter of urgency. I hope that this House will make it clear to the world where we in Britain stand in this respect.
The United Nations devotes much of its energies to action designed to ensure that the coloured peoples are not maltreated by white peoples. The United Nations should be prepared to widen the scope of its efforts, and to establish machinery that would provide that no peoples, even if they be white peoples in the Congo, shall suffer at the hands of others.
I apologise for speaking at some length, and I trust that my faith in the indulgence of the House to a new Member will not have been misplaced.

4.31 p.m.

Mr. David Ennals: My first privilege is to congratulate the hon. Member for Southampton, Test (Sir J. Fletcher-Cooke) on his maiden speech. I


delivered my own maiden speech only two weeks ago, and I hope that he will not feel it condescending of me if I say that I thought that he made a very significant contribution to our debate. It was a very thoughtful speech, which drew from his long and distinguished service to this country in the Colonial Service. I know that there will be many occasions when hon. Members on both sides will welcome contributions from the hon. Member.
I wondered at one moment in what part of the Commonwealth the hon. Member was serving in 1956. He said that he had some difficulty in recognising differences in attitude to the United Nations on the two sides of this House. No doubt, the hon. Gentleman was very busy at that stage in important service on behalf of the country, and newspapers did not get through to him.
Secondly, I should like to tell the hon. Member for Liverpool, Wavertree (Mr. Tilney) how very much I welcome the fact that so early in the life of this Parliament we are able to have a constructive debate on the future of the United Nations. In the limited amount of time at my disposal, I shall not speak in the broad about the United Nations, except to say that I believe that in that organisation lies our main hope for peace in the world, and that it will be through the United Nations and through disarmament that we will achieve our goal. That said, I want to direct my thoughts to the particular problems of peace keeping.
This is a very apt time to have this debate, because it is the time when the United Nations is faced with the financial crisis not of just how to pay for its previous peace-keeping actions, but of how it is in the future to pay for its peace-keeping function. Again, we are holding this debate in the shadow of the tragic events in the Congo. There are probably many of us on both sides of the Chamber who feel that if the United Nations Force had stayed there, if the member States had been prepared to finance it to stay there, we might not have seen the tragic loss of life. Some of us gave warnings of what might happen if we allowed the United Nations Force to pull out before its task was completed, and we have seen the consequences of that action.
As the hon. Member for Wavertree has said, there have been real achievements in peace keeping. He mentioned the United Nations Emergency Force in the Middle East and the current operation in Cyprus, and I could also mention a number of other instances in which United Nations observers have prevented a bad situation from growing worse. I remember that a few weeks after the United Nations had sent its observer group to the Lebanon, when it was reported that Syrian troops had moved into the Lebanon, I was in the frontier area.
The observers had reported that there was no sign of Syrian forces in Lebanese territory, but everyone on the spot said that before the United Nations observers arrived hundreds upon hundreds of Syrian troops had been there. As soon as it was known that the observers were coming they had got back into their buses and had driven back over the frontier. It is clear evidence that observers can perform a function without ever firing a shot.
This debate is also important because most of us feel that the main danger of war in the world does not spring from a direct confrontation between the forces of the Soviet Union and the other Communist countries and the forces of the West, but that it is likely to develop from a brush fire situation in which both sides become involved. It is, therefore, of prime importance that we should improve the peace-keeping machinery of the United Nations.
It may be thought that I am too realistic—that I have not set my eyes far enough forward, and that I am not optimistic enough. There are many things one would like to see done but the world situation does not allow us to do them. I do not think that the original concept of Article 43—the allocation of substantial forces by members of the United Nations, and the placing of their contingents under United Nations control—is "on" in the conceivable future. Until we have made progress in the process of disarmament I do not think that we shall be able to establish an international force that can in any way perform enforcement functions.
Neither do I believe that we can yet achieve the small permanent peacekeeping force which is, I believe, in the


minds of some hon. Members on both sides: the idea that we should have in permanent existence an emergency force of between, perhaps, 5,000 and 30,000 troops to carry out functions such as those that were carried out in the Middle East, the Congo and Cyprus. I do not believe that we are yet ready for that. There is no sign that the majority of the Governments of the world—particularly the Soviet Government—are prepared to give this authority to the United Nations. In fact, it is the political objections to the better organisation of our peacekeeping needs that are more serious than the financial ones.
It was because of the difficulty of creating such a force that the Canadian Prime Minister, Mr. Lester Pearson, put forward the proposal referred to by the hon. Member for Wavertree. The United Nations should examine that proposal—a group should be established to study it—but I confess that I have serious doubts about it, and those serious doubts are reflected not only in the article which Mr. Lester Pearson wrote, but in the very wording of the Motion.
The weakness in the Motion is the thought that we can establish for the United Nations a force of like-minded States. The thing about the United Nations is that it draws from all countries; there is nothing like-minded there. We can see that N.A.T.O., the Warsaw Pact or some other regional treaty brings together like-minded States-the United Nations does not do that. There is the danger, whether it is done through the proposals canvassed by Mr. Lester Pearson or others, of establishing a force that is not representative of the main forces of the world and thinking that it can do the job of the United Nations.
I remember, also, looking back on some of the reports and words of the late Secretary-General, Mr. Dag Hammarskjoeld, that in many of the challenges that come before the United Nations the situations are quite different, and we might find that to be like-minded in one situation does not mean to be like-minded in another. Dag Hammarskjoeld said in the report which he made to the 1961-62 Assembly:
The Congo experiment has strengthened my conviction that the organisation of a standing

United Nations force would represent an unnecessary and impractical measure, especially in view of the fact that every new situation and crisis which the Organisation will have to face is likely to present new problems as to the best adjustment of the composition of the force, its equipment, its training and its organisation.
What, therefore, can we do? My hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) said that we must make a beginning, and I agree. It may be that the first steps will be only limited, I mention two in particular. First, we must make more effective stand-by arrangements. We must make certain that there are more countries which have specially recruited trained forces ready on call by the United Nations. This was reflected in the "Uniting for Peace" resolution back in 1950, which said that member States should maintain
national armed forces elements so trained, organised and equipped that they could promptly be made answerable, in accordance with the constitutional processes, for services as a United Nations unit or units.
We have seen the beginning of this. Canada, as has been pointed out, has a Regular Army battalion available on call by the United Nations. The Netherlands has a marine corps unit, Finland has an infantry battalion and the Scandinavian countries together have a force of 3,000 properly trained troops recruited for this purpose. It is extremely important that we should see that other countries are prepared to undergo this preparation.
The task of a United Nations force is a very difficult and onerous one. It calls for tremendous control and often the training adequate for ordinary Army functions may not be enough in the difficult situations with which a United Nations force is presented. It is also extremely important that we should try to persuade every non-like-minded State to take part. It is important that Brazil, India and Yugoslavia should take part and that other countries—those which are in the Communist world and those which are not—from all continents, including Africa, who could make a contribution to collective security.
My second proposal is not new. It is that there should be at United Nations headquarters, recruited by the Secretary-General, a trained staff as a nucleus of a permanent force. I hope that it is not impermissible in this House to quote one's


own words. In a pamphlet I wrote in 1959 I said:
There would need to be a nucleus of officers and men concerned with questions of command, military equipment, feeding, welfare and law. Such a nucleus … should be permanently available at U.N. headquarters and be on the U.N. Secretariat, thus individually recruited. The staff officers concerned should be in close contact with contingent commanders of the stand-by troops.
There one has a picture of a headquarters group of staff ready to meet a situation arising and dangers as they emerge so that the United Nations would be ready logistically to face these challenges in different parts of the world with contingents ready and on call.
What about the contribution which Her Majesty's Government can give to this task? It has been said that it would not normally be wise for one of the five major Powers to be involved in a peacekeeping force. This may be so in normal circumstances, but Cyprus proved not to be a normal cirmumstance. No one, on either side of the House, would say that the British troops who were part of the United Nations Force in Cyprus did not perform extremely important functions. But there will be other situations in which it would be quite inappropriate for British forces to participate. Each situation may require different contingents to fulfil the political challenges that are met.
Britain ought to declare its willingness to train certain of our forces to be available if required. It may be that we might concentrate not so much on combatant forces, but that some of our technical services—some of our engineers and signallers can be contributed so that we could have signallers who have been trained in several languages available for service. We must offer to provide transport and other logistic support when called upon. We might offer training facilities to those from other countries who are being trained for United Nations service.
My last consideration concerns the complicated question of finance. I do not want to deal at this stage with the difficult issue now before the Assembly. Like other hon. and right hon. Members, I welcome the clear statement which was made earlier this afternoon from the Government Front Bench that we would stand firmly by the collective principle. It may be that way will be found for

compromises from both sides which will meet the difficulty. We hope that it will. I hope that no one will suggest that we should rush into a situation which might produce a collision course.
When we look at the question of financing future operations we recognise that, while finance appears as a huge looming problem, in fact the demands made on any major State are diminutive compared with the demands already made to meet national defence expenditure. We are not here dealing with huge sums of money. It must be established that if a headquarters nucleus is approved and recruited it must be on the United Nations budget and paid for by all the member States. The stand-by contingents when called upon must be paid for out of the United Nations budget and paid for by all member States. But we should be prepared to accept differences in apportionment. The principle has been accepted that countries with small ability to pay might be asked to pay a relatively smaller amount. We should be willing to look at proposals for not sticking rigidly to United Nations budgetary proportions.
There are also situations in which only a few member States might need to make contributions. The United Nations force which went to West New Guinea and the one which went to the Yemen—I am not suggesting that it was a successful operation—were established and paid for not by all member States. Very serious consideration should be given to the proposal, already voiced in this House by my hon. Friend the Member for Ash-field (Mr. Warbey), that there should be a United Nations peace fund and that it should be possible for individuals and organisations to make their modest contributions to peace-keeping even if those payments were of only a token nature.
I hope that during the course of the present United Nations Assembly the United Kingdom will show a very positive attitude to the problems of peace-keeping. I hope that a lead will be given from Her Majesty's Government. I hope that they will indicate their willingness to support and assist United Nations peace-keeping operations. I hope that we shall specifically propose that there should be established a headquarters planning group such as that to which I have referred. I hope


that the Government will welcome the initiative of Mr. Lester Pearson and others involved in the Ottawa conference and call upon the United Nations to examine the consequences. I look forward at the end of this debate to a reassertion of the positive attitude of Her Majesty's Government to this most vital question.

4.50 p.m.

Mr. Philip Goodhart: If my memory serves me correctly, which it may not do, the first time that I met the hon. Member for Southampton, Test (Sir J. Fletcher-Cooke) was in the United Nations Trust Territory at Tanganyika, when I decisively beat him at a game of croquet. Speaking about the United Nations this afternoon, I thought that the hon. Member hit decisively and put the ball squarely through the hoop.
It is about a year ago since I made my maiden speech at the United Nations, where I had the honour to be "our man" on the Third Committee which deals largely with social and humanitarian problems There I have been succeeded by the noble Lady, Baroness Gaitskell, whose warm humanity will, I know, make a sharp impact on the delegates.
The Third Committee, with its emphasis on racial relations, is of the greatest interest to the newly emergent countries. When serving at the United Nations it does not take one long to realise that it is the new nations that dominate the scene. In fact, as Sir William Hayter, an acute diplomatic observer, said, the United Nations is really the place where small Powers send their diplomats to practise anti-great Power diplomacy.
The one reform of the United Nations which at the moment grips the imagination and the interest of the new nations is the making over of the councils and, indeed, of all the component parts of the United Nations in the shape of the General Assembly, where new nations have already achieved a substantial majority. I do not think that there is any particular diplomatic or democratic justification for this. As has been so ably pointed out by my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), the difference in size between the nations is very striking.
At present, black Africa has 34 votes in the General Assembly and a population of 200 million, whereas India, with one vote in the General Assembly, has a population of 400 million. The disproportion in votes between India and Africa is 1 to 68 and I would point out that should she ever become a member of United Nations Communist China has a population more than 3,000 times greater than that of Malta, the last country to be admitted to membership of the General Assembly.
We must recognise that this wish to make everything in the image of the General Assembly is the driving force for reform in the United Nations at the moment, but it does not necessarily make for great efficiency. The Third Committee, on which I served, had representatives of every single member State sitting around the table. Last year, the main discussion was on the preparation of a draft declaration on the elimination of all forms of racial discrimination. An able and satisfactory draft on this subject had already been prepared for us by the Sub-Committee on Human Rights of the Economic and Social Council, but the fact that there were 112 members of the Committee meant that every nation had to put forward one or more amendments, if only to justify its status and the presence of its representative. We spent more than 150 hours debating this document.
Some of the amendments submitted were, frankly, completely unintelligible. I remember that at one point I virtually acquired the chairmanship of this Committee because I brought with me to the meetings each day a copy of the Shorter Oxford Dictionary. Our chairman was a Chilean lawyer who prided himself on his knowledge of the legal meaning of English words. He would rule that a word meant one thing and I would look it up in the Shorter Oxford Dictionary and find that it meant the complete opposite. I would then raise my hand on a point of order and my version would be accepted. One African delegate came up to me half-way through the discussion and said, "How can you stand the maltreatment of the English language which is going on in this Committee?"
By the time we had spent 150 hours discussing the amendments to this declaration, the document had lost all cohesion and form. This was meant to be


a document to give a moral lead to the world. Children in the Andalusian high levels may be learning the declaration by heart at this moment, but so far as I know, the only time that it achieved any public recognition was when it was printed in toto on page 34 of the New York edition of the New York Times. Then it disappeared from sight altogether.
Unfortuately, this lack of clarity and intelligibility is creeping into documents which are of rather greater urgency and importance than a draft declaration on the elimination of all forms of racial discrimination. I doubt very much indeed whether, in the future, in any United Nations intervention which may conceivably emerge we shall have in the Security Council or the General Assembly a political directive which is understandable. I think that this will be because of the blurring of the language which comes when one has so many "cooks" stirring the pot, and also because of the fundamental and political divisions which separate the member States. I doubt, therefore, whether, in the future, we shall have more political guidance from the Security Council or the General Assembly any greater than we did over the Congo or Cyprus. That means that the responsibility for guiding the destiny of the United Nations Forces falls back on the Secretary-General and on the commanders of the United Nations Forces in the field.
It must be recognised that in recent months the lead which has come from the Secretary-General's office has been largely a negative one, although it has not necessarily been the worst for that. That, in turn, has put still more responsibility on the shoulders of the United Nations field commanders. I had the privilege and pleasure of listening to the speech made at the United Nations last October by my right hon. Friend the present Leader of the Opposition, in which he said that if certain operations have to be undertaken it was surely better that they should be undertaken officially. This means that we must try to have greater training for those who are likely to be chosen to be United Nations force commanders and those who are likely to be chosen to serve on the staffs.
This, for all practical purposes, means mainly Indian and Swedish commanders.

I do not myself believe that we should shirk establishing a United Nations defence college. At the moment there is a N.A.T.O. Staff College. I do not see why there should not be a small United Nations staff college with a special place for those who are likely to be called on to command operations.
However effective the peace-keeping force may be, it will not help very much if the entire United Nations goes bankrupt. The clash between the Soviet Union and America on the payments that the Soviet Union owes to the United Nations has emphasised the danger of the bankruptcy that faces the organisation. Indeed, the strain has been so great that the Secretary-General has retired to hospital with a suspected ulcer, even before he has had the pleasure of meeting our Prime Minister.
One good item, however, may emerge from the present financial crisis. That is a sense of new reality, because sitting in the delegates' cocktail lounge at United Nations headquarters it is easy to absorb the idea that in the long run the United States will foot the bill for everything. As one sees the riches of America moving up and down the East River, it is easy for this myth to gather force. In each year up till now there has been at the back of delegates' minds a feeling that, whatever they did, in the long run the taxpayer of the United States would dip their hands into their pockets and shell up. Now, as a result of this direct confrontation between the United States and ourselves and the U.S.S.R., it is plain that there is a limit beyond which the United States will not be pushed and that it is not prepared to be a bottomless well. I hope that this will bring a new sense of reality into the financial thought of the United Nations. Once this has happened, a move can be made towards the imaginative proposals advanced this afternoon by my hon. Friend the Member for Wavertree.
I believe that what is needed at the moment is not so much a new constitution or new powers or new committees or even a new army, but rather a new sense of reality and a new determination to make the organisation as it exists work. If, rather than tinkering with the machinery, an effort could be made to get a new spirit of urgency behind the


organisation as it is at present, I think that the present crisis will not have been in vain.

5.6 p.m.

Mr. Norman Buchan: I do not wish to follow all the facets of the argument advanced by the hon. Member for Beckenham (Mr. Goodhart). However, I will take up his suggestion that what is needed is a new determination and a new sense of reality towards the United Nations. I do not believe that the answer lies in the nature of the organisation we want to establish. I believe that what needs close examination are the conditions we face in the world as a whole. That having been done, we should then decide how the concept of a "snuff force" can fit in.
The General Assembly has changed in two main respects. First, it was in process of formation before the hydrogen bomb, and even before the atomic bomb, was developed. Thus, since its formation the situation has altered dramatically. Secondly, the organisation was in existence long before the newly emergent nations started to be admitted to it. It must be realised that the organisation came into being before man put into his hands the possibility of a rapid and early self-liquidation. The effect this has had on the organisation needs to be examined.
We live in a world basically dominated by two world blocs. There is what has been described in the dreadful phrase "a balance of terror". One of the troubles with the balance of terror is that decisions are taken out of the hands of diplomats and placed in the hands of no person at all, but into the structure of the weapons system. One thing we must achieve is to take decisions away from the mechanical response of weapons systems and place them again in the hands of diplomats. We must ask ourselves whether a snuff force, however it would operate—I have reservations about the phrase "like-minded States" —can assist us to do this.
I believe that it can assist us, because, although the danger is the existence of the weapons systems, no war is caused solely because of the existence of weapons systems. War comes about by a response to a flashpoint, a human situation which sets the mechanical situation

in motion. It is when the flashpoint is reached that such a body could have some effect. It would give time for diplomacy and for conference. It could bring about a climate in which the world was no longer dominated by fear. The creation of such a force would not of itself solve the major problem which has developed in the two bloc confrontation, but it could remove the tensions and the danger of political escalation, the danger that a side issue might escalate into a two bloc confrontation.

Mr. Anthony Fell: Does the hon. Member think that if such a force existed today it would be able to handle the situations in Rhodesia and Indonesia to the satisfaction of those people who think about these things?

Mr. Buchan: I was going to deal with that point later, but if the hon. Member wishes I will deal with it now.
I think that one of the difficulties is what I have included in my notes as the "democratic difficulty". In Africa, there is not only the Rhodesian situation. This is not only an international situation, but an internal problem. If we move further south we meet the problem of South Africa. The emergent nations will be worried and mighty worried about the use of such a force in what they regard as a justifiable revolution in that country. When one is on the other side of a situation the perspective is different, and the fear may be that such a force could be used to preserve the status quo and sometimes an unjust status quo.
I am not clear that it can necessarily be used in such a situation, but I am clear that unless we take steps to develop the right kind of situation we shall never solve the problem. To be valuable it must be democratic. It must be reflective, particularly of the nonaligned nations. It must be universal and effective. It must be created in such a way that it can be moved in quickly. The situation in Cuba, for example, showed how little, when the crunch comes, the diplomats can affect the situation except those in the two main blocs. We stood aside and waited for the Cuban situation to develop. One would have hoped that, given this kind of force, time could be given for the diplomats to work. This is almost a plea for a field for manoeuvre.

Mr. Fell: I am grateful to the hon. Gentleman for giving way again. If he believes that the Cuban situation worked out the right way, how sure is he that had there been such a force existing the Cuban situation would have worked out in this way?

Mr. Buchan: The parallel I was making was the failure of any other nation to have a decisive say, except for the two forces confronting each other. The fact that it has worked out successfully might remind us of the dangers of this kind of situation. The Congo situation is the kind of situation in which this approach could be useful. Despite my reservations, I hope that this is the kind of direction in which we can move in the future.

5.14 p.m.

Mr. Jeremy Thorpe: May I first thank the hon. Member for Liverpool, Wavertree (Mr. Tilney) for having made this debate possible. May I also add my congratulations to those of other hon. Members for his lucid and constructive speech and, perhaps not least, for its brevity. My closest experience of Private Members' Motions is of the two occasions when I was fortunate to come first in the Ballot, and the opening speech on each occasion lasted for at least an hour. The hon. Gentleman set a good example.
I should like to refer to a conversation that I had some days ago with the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). I asked him whether he knew when the hon. Member for Southampton, Test (Sir J. Fletcher-Cooke) was likely to make his maiden speech and on what subject he would speak. He indicated that he thought the hon. Member would speak shortly and that it would be on a matter of which he had personal experience, probably foreign affairs. All I can say is that Darwen's theory has been Test's performance. The hon. Gentleman has drawn on his wide experience to give us a speech which I hope will be the first of many which the House will hear.
In the annual report to which he wrote an introduction some weeks before he died, Dag Hammarskjoeld said that in his view the member nations of the United Nations held one or two different concepts, both conflicting, as to what its purpose should be. He said that there

are those who regarded it as a static conference machinery firmly anchored in the time-honoured philosophy of sovereign national states in armed competition. And, secondly, there are those who regarded it as a dynamic instrument to resolve conflicts or, better still, to forestall them from arising at all. From the debate it would appear to be the general view of those who have participated that the United Nations should be regarded in the later category and not the former. Indeed, I would say that it is the instrument for the ultimate organisation for a world authority.
Very often there are those who criticise the smaller nations in the United Nations. I do not intend to be more controversial than I can possibly help. I think this came out, however, in he speech by the Leader of the Opposition at Berwick. All I would say is that the criticisms of those nations would exist whether or not the United Nations existed. The advantage of the United Nations is that those criticisms are concentrated through the medium of the United Nations but they are not polarised to demand support for an Eastern or a a Western bloc.
The interesting thing is that new nations have been able to regard the United Nations as a forum for political expression without having to associate themselves with the Western or the Eastern bloc. Indeed, when the Troika dispute came about and Russia was clearly threatening the survival and the independence of the Secretary-General, it was the loyalty and pressure of the new neutral nations, as much as any, which forced Russia to withdraw from that brink. Many of the new nations have made a great contribution, which expressed in terms of their economic poten-tialities has been formidable, towards the United Nations forces. One thinks straightaway of the speed with which Ireland, Tunisia and oher nations were prepared to supply troops for the Congo expedition. Indeed, I would remind those who would criticise the smaller and newer nations of the visitor to the United Nations General Assembly at the time when Mr. Khrushchev was banging the desk with his shoe. He turned to his host and said, "Tell me, who are the new nations in this Assembly?"
Therefore, the critics of the United Nations, who are angry with those who


challenge the national policies which others happen to think are right, are in a sense criticising nations who would in any event be there with their criticisms. But they are able to do this in a way in which they can dissociate themselves from the power blocs in world politics. This is tremendously important.
The Motion refers to reforms, and I should like to refer to one or two matters which have not perhaps been touched upon as much as the need for an international force. I should also like to mention a useful report which has been produced by a working party of the United Nations which deals with many of the matters which ought to be recalled. In the last Parliament I had the honour to be the Treasurer of the United Nations Parliamentary Group and it is, therefore, not inappropriate that I should turn to finance as the first matter with which I should deal because finance seems to me to be the whole crux of the problems facing the United Nations.
Unless the financial problem can be solved the United Nations will be powerless. In fact it will go bankrupt. The United Nations bond issue was a temporary palliative and nothing more. I agree with the hon. Member for Beckenham (Mr. Goodhart) when he says that the present confrontation between Russia and America over Russia's non-payment of dues, which at the moment amounts to about 52 million dollars, indicates that America is not prepared to go on paying the major share of the running expenses of the United Nations if other nations, like Russia and France, are not prepared to meet their obligations. In fairness to the United States, it should be said that it would be very difficult for the President of the United States to persuade the American Congress to continue to make appropriations if other Powers were in default. Therefore, one should have a fair amount of sympathy with the present position which the United States is taking over this matter.
I take the view that if it is to be permanently solvent the United Nations cannot exist without having some power of taxation. I believe that the United Nations should have some power of taxation, the rate to be agreed by the General Assembly, equivalent to between l½ per cent and 2 per cent. of the gross world product. It might well have to be apportioned

by ability to pay, having some reference to population and so forth. I believe that we must reach a time when there is one budget for all expenditure.
The Congo expedition highlighted the position that if a member nation does not approve of a particular operation it may then, if not have the right, deem itself to have the right to opt out of its financial obligations. To regard this in the context of a member State, it would be a very odd situation if individual taxpayers in this country were prepared to refuse to pay their contribution on the ground that they disapproved of this or that measure. One might almost say that 3 million Liberals would be entitled to refuse to pay taxation until they were adequately represented—although there might well be something to be said for that. I am certain that we must have the knowledge that there is a regular sum of money coming in to finance police operations without having the Secretary-General flying all over the world, cap in hand. We must also put the technical fund and other specialist agencies on a financial footing. This is priority number one for the future of the United Nations.

Mr. Fell: I am grateful to the hon. Member for having given way to me at all. I am a little worried about what he has said. Everybody would agree with him to the extent that if all the nations of the United Nations agree in advance that they should pay X percentage or £X towards an operation or the upkeep of the United Nations, then whatever happens they should pay. I am a little worried whether the hon. Member is advocating that the United Nations should be able to say to member nations "You are going to pay X percentage or £X regardless of whether you believe or not in a particular operation".

Mr. Thorpe: The fact that it worries the hon. Member—and I do not mean this offensively—does not surprise me. It would be logical. We know his viewpoint on these matters.
I am only saying that if this international organisation is to work, all its members will have to agree to some decisions with which they are not wholeheartedly in agreement. This is the essence of national government and eventually it will become the essence of international government. All I say is


that member nations will have to be assessed, and there must be machinery by which member states will know what is expected of them a year or two in advance, so that the Secretary-General can have some idea of the scope on which he must plan. There may well be peace-keeping operations which may offend the Katanga lobby or other lobbies in other parts of the world. This is inevitable, but if we are to have an organisation which has any future or any financial solvency this can only be on the basis of individual contribution.

Mr. Fell: Mr. Fellrose

Mr. Thorpe: Although the hon. Member prefaced his last intervention by an expression of his gratitude, he has had a fairly good innings and he may be able to catch your eye later, Mr. Deputy-Speaker.
On the second point of a United Nations force, the hon. Member for Renfrew, West (Mr. Buchan), to whose speech I listened with great interest and much sympathy, underestimated the United Nations activities at the time of the Cuba crisis. It is perfectly true to say that it was a naked confrontation between the United States and Russia, but I think that it can be said that the Secretariat of the Secretary-General played a great part in providing a forum. I agree that one could have wished that there had been a United Nations presence which could have been flown in, but the Cuba affair was an indication of the success of the Secretariat in helping to iron out problems in any part of the world.
As the hon. Member for Dover (Mr. Ennals) said, Korea, the Gaza Strip, West Irian and Suez were occasions in which the United Nations played a great part in peace-keeping operations. One has only to be in Jerusalem and see the barbed wire going down in the middle of the road to realise that only United Nations presence prevents the outbreak of what could be a serious incident on either side of the border.
I do not agree with hon. Members who feel that a process of earmarking troops is necessarily the way to build an international force. It may well be that we shall have to settle for this as second best, but, as the hon. Member for Wavertree has said, they must learn

to train together and live together as a force. One of the great difficulties is that the forces which are earmarked are not necessarily the forces which the emergency demands. For example, I believe that the Canadians had paratroopers earmarked and filled up with various typhoid and yellow fever shots. They were ready to take off, but when the crisis arose they were not the type of troops required. We must therefore work towards the idea of international recruitment. I believe that on that point there is little difference between us.
One of the miracles of the United Nations has been the way in which we have built up an international civil service. When one talks to people in the United Nations who are attached to the various agencies one finds that they have become internationally minded. They seem to have dropped most of their national prejudices and have become international civil servants. This is comparable to a High Court judge who while practising at the Bar may have been violently partisan and have expressed strong political vows but who when he becomes a judge, though there are exceptions whom I will not mention, takes on a different persona. I think that this is true of international servants and this is the sort of dedication one would wish to expect from an international police force.
As for the General Assembly, we might well get away from the fact that everything has to be carried by a two-thirds majority vote. We could easily have a simple majority on issues like the admission of members, the credentials of delegates, and the election of nonpermanent members to serve on the Security Council This might well be something which could obtain general support. But having said that, we should have to consider the introduction of a system of weighted voting. As hon. Members have said, it is ludicrous that Malta, for example, should have the same say as India or, perhaps some day, China. This change might well lead to larger delegations but perhaps that would be acceptable and it might well be that those delegations, as they do in the Council of Europe, could represent different shades of opinion within member nations. To my mind, one of the interesting features of the Council of Europe in Strasbourg


is that representatives there think not so much nationally as politically, and one sees the various political groups coming together and overcoming national barriers.
This leads me to the Security Council. The Security Council was created at a time when there was a handful of member nations, and we must accept that its numbers will have to be increased. I should like to see the number raised to about 18 members.
The great weakness in the Secretariat is that there is no deputy to the Secretary-General. It is vital that a deputy should be appointed to take over in difficult situations and to guarantee that we do not have the agony of delay which followed the death of Dag Hammerskjoeld some time ago.
The hon. Gentleman mentioned the International Court of Justice, and again I agree. The resolution of 1947 laid down that member nations should adopt the optional clause to submit to the jurisdiction of the International Court of Justice under Article 36, but there are many nations which have not adopted it. I hope that we shall see the International Court of Justice giving far more advisory opinions. The advisory opinion which it gave on the non-payment of dues was of great importance, and I believe that the use of advisory opinions can have the effect of taking certain political questions out of the forum of the United Nations and settling them on a quasi-legal basis—

Mr. Fell: Mr. Fell rose—

Mr. Thorpe: The hon. Gentleman must contain himself—taking much of the political sting out of what are very often quasi-legal problems.

Mr. Fell: This is a serious point.

Mr. Thorpe: I am glad that the hon. Gentleman is listening so carefully.

Mr. Deputy-Speaker (Dr. Horace King): The hon. Member for Yarmouth (Mr. Fell) has made three interventions. I hope that he will take note of the conventions of the House.

Mr. Fell: Two interventions.

Mr. Thorpe: Turning to the economic position, with the terrifying prospect that the world population will double in,

perhaps, 40 years, it would be interesting to know the Government's views about giving greater assistance and impetus to the Development Decade. Our own contribution is very much less than 1 per cent. and very much lower in ratio to our national income than that of almost every other donor State on the Development Aid Committee. I speak subject to correction, and it will be interesting to hear about this.
It is generally agreed now that China must be a member of the United Nations. One cannot ignore one-fifth of the world.
I hope that the Government will take the initiative in regard to the Resolution passed by the General Assembly on 16th December 1963, about giving assistance to the victims of apartheid in South Africa. This was a new development for the United Nations and one which I warmly support.
For the future—perhaps this is too much in the realms of idealism—I should like to see the General Assembly consisting of the appointees of member nations, as at present, charged with the political issues, the issues which are likely to cause a flare-up in any part of the world, and I should like there to be also a directly elected assembly, elected by the people of the world, dealing with the cultural, economic and social problems which engage a valuable part of the United Nations activities. One would then have a bicameral system within the United Nations, and one could turn the secretariat into a small executive to carry out decisions. In this way, we could really work towards a world authority.
One of the first actions of Her Majesty's Government was to appoint as their representative a man who was widely respected at the United Nations and who has given great service both as a representative of this country and as a civil servant of the United Nations. His presence will, one feels, have the same effect as the appointment of Adlai Stevenson did in improving the image of his country at the United Nations. This country has played a great part in the United Nations, in taking political initiatives and in always being forthcoming with our contributions. We have had less happy experiences at times, which I shall not dwell on now, possibly voting in lobbies where many of us would have


preferred not to otherwise. I hope that the Government will regard the reform of the United Nations, and particularly the reform of its finances, as one of the foremost problems which they have to face in foreign affairs. If they do that, the whole House will, I am sure, send to the noble Lord who now represents us its best wishes for his success and for the future of the United Nations.

5.36 p.m.

Mr. Eric Ogden: One of the virtues of the Motion is that it directs attention to a situation as it exists now. I think that this is the first time that such a Motion has come before the House this Session. Whatever has happened in the past, whatever support should or should not have been given to the United Nations, we are asked to set that on one side and look at the situation as it is now. The Motion calls attention to the United Nations, "its failures and successes". This is quite right, but, if the matter were left there, we could probably debate those points for the rest of the Session. The Motion concentrates on a particular aspect of the subject raised in the latter part.
The first question I put is this. There is a reference to
the creation by like-minded States … of a small peace-keeping force on a permanent basis.
I take it that this means by the United Nations as a whole, not by separate sections of like-minded States within it. If this is the intention, I imagine that there is no difference between us. One of the strange features of this debate so far has been that normal party divisions along the centre—with a little enclave on one side—have, so far as I can see, disappeared. We are all in favour of a radical reform of the United Nations, some of us being more in favour than others.
I welcome and support the Motion, particularly as it was moved by a representative from the City of Liverpool, the hon. Member for Liverpool, Wavertree (Mr. Tilney). I have the honour to represent part of Liverpool, a seaport which, like its Members, looks outward, away from its own small environment and troubles, across the Atlantic and to the world as a whole. We have political differences in Liverpool, and it is seldom

that all Members from Liverpool agree, but, when we do agree—and we seem to agree on this point—our agreement is the stronger because of, or in spite of, the differences which we have at certain times.
I have three points to raise, and in this respect my speech may be a little different from those of other hon. Members. I shall not try to tell the House what I think on this or that. I wish to raise points on which I want information, and I hope that succeeding speakers, notably those from the Front Benches, will be able to help me with answers.
We talk of the "United Nations", and we are inclined to assume that its nations are united rather than accept that the aim of our policy should be the creation of a situation in which they are united in fact, not just in name. As a name, "United Nations" is misleading.
When we talk of a "small peace-keeping force", are we thinking of a volunteer force, a sort of glorified Foreign Legion? Are we thinking of mercenaries—another name which seems to be developing an unpleasant meaning—or what are we thinking of? Are they to be national units?

Sir Douglas Glover: We are in great danger of taking the word "mercenaries" entirely out of context just because a particular association happens to have got stuck to it. One could call them crusaders. They would still be mercenaries. They are, in fact, a volunteer force made up of people from different nations who have to be mercenaries because they have to be paid.

Mr. Ogden: That was the point I was making. The crusaders were not entirely as holy as we try to make out. The fact that one calls something a certain name does not mean that it is either good or bad.
Are we to say that we want national units seconded permanently or ready to be made available for particular occasions? What do we mean when we talk about a volunteer force of national units? If we are thinking of national units, are we prepared to give up some of our national sovereignty? The cry that we get from certain persons at certain times is about national sovereignty, prestige projects and so on.
When we talk of a United Nations peace-keeping force, are we thinking of certain task forces which are in themselves independent? Will they use normal peace-time bases or will they require permanent bases of their own? If they require permanent bases in various parts of the world, are we prepared to give up some of our own bases? I think it would have been an excellent idea over the past five or ten years if we could have transformed some of our own bases into international United Nations bases. These are points on which I should like to hear the views of both sides.
Then there is the use of the force, provided that it comes into being at all. If it does so, will it be by invitation from member Governments, or will it have the right to go in whether or not it is invited by a particular national Government? If we talk about creating a United Nations force, are we decided on the terms on which it can be used? Will it override national Governments? Will it have its own nuclear arms? Is our aim that at some stage in the future it will be the only nuclear power?
If we think that the United Nations must be strengthened, we can achieve that only by giving up some of our own power and strength. At the same time, we must realise that, because we have been prepared to give up some of our strength, in the long run we shall be the stronger for it.

5.42 p.m.

Sir Harry Legge-Bourke: If every hon. Member approached the topic with the common sense that the hon. Member for Liverpool, West Derby (Mr. Ogden) has just done, how much better the United Nations would be! The hon. Member has put his finger on one point which I believe is of the greatest importance, the point stressed in the terms of the Motion tabled by my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney). He has stressed the importance of considering the issue of sovereignty. I think that sometimes the electorate and even some hon. Members forget that of all the matters concerned in politics none is more frequently concerned than sovereignty. Indeed, one could argue that politics is about sovereignty, be it the sovereignty of the individual, the

sovereignty of the State, the sovereignty of Parliament and so on. Sovereignty is the vital issue.
Listening to the debate, I have been reminded of something which the hon. Member for Devon, North (Mr. Thorpe) could bear in mind, that what we are dealing with is "Not So Much a Programme or a Way of Life." A programme has never yet been conceived, and we have not yet devised a new way of life. We are still concerned with the sovereignty of the community and of our country and with whether or not the United Nations should have a sovereignty of its own. The hon. Member for West Derby was right to ask the questions that he did and right to ask those questions of the hon. Member for Devon, North when he puts forward the suggestion that we should have a permanent force and have these new powers given to the United Nations.
Are we in this country prepared to sacrifice more sovereignty than we have already had to surrender by force majeure? I am not. I have always believed that the electorate returns hon. Members to this House primarily to encourage one Government or another to increase the national sovereignty of our people as far as possible in the lifetime of a single Parliament.

Mr. Thorpe: If that is so, can the hon. Gentleman justify the fact that after the 1959 General Election, without any prior commitment, and, indeed, taking the contrary view, he supported a view which would have given Europe—I supported it—far greater sovereignty than anyone has ever thought we should be likely to hand over?

Sir H. Legge-Bourke: The hon. Gentleman has got me wrong. I had always believed that France would prevent us going into Europe, but I believed that our nation had become so divided on the issue that we had to try. The miracle to me is that France let us go on trying so long.

Mr. Thorpe: But the hon. Gentleman voted for it.

Sir H. Legge-Bourke: I did my best to say that I never thought that it would work. Nevertheless, the country was still obviously divided about it. It cut right across all parties. There are members of the Liberal Party who go around being


anti-Common Marketeers. All I say on that particular irrelevance is that nothing surrenders sovereignty until it is deliberately given away by this House and by Parliament, and it is the surrender of sovereignty that we have been forced to agree to that has weakened our bargaining power now.
I always feel that the United Nations is paved with very good intentions, but all too often the people who go there are those who were so aptly described by Mrs. Adlai Stevenson the last time her husband ran for President. In a book called "The Egghead and I" she wrote:
When a man is unable to govern
His wife, his children, his nurse,
He takes a particular pleasure
In running the universe.
I think that many of us in the House of Commons are also guilty of that sort of thing from time to time.
However well-intentioned men are today—and I would not for a moment question the sincerity of those who serve the United Nations—the issue that confronts us is: do we believe that the individual should be encouraged to be a better individual living more closely in line with the highest moral code, or not? Every time a Government is made bigger, every time an international agreement is welded into an international organisation, some people somewhere down the line, and often all too many, say "Very well, I can leave that with them and need not bother."
It is the besetting sin of democracy and of the world today that the stronger one makes a Government the more people think that they themselves need not bother as individuals. I believe that if we look back over the record of the United Nations we see the same thing happening. All too often we see the over-riding of the rights of the individual.
One of the biggest decisions which the United Nations ever took, and it was one which I did my best to prevent it taking in so far as one back bencher in opposition in the 1945 Parliament could possibly do so—it was one of the first decisions that it took, and it was one of the worst that it took so far as justice was concerned—was the one over Palestine. I see the hon. Member for Leicester, North-West (Sir B. Janner) sitting opposite. He and I have often

debated this at great length in the past, and I do not want to go over all the ground that we have covered. However, I would emphasise that we all have to face this about the United Nations—and this has been said by men who have served at very high levels in the United Nations—that we may get out of the United Nations some decisions which will work but let no one suppose for a moment that they will be just, because they will not.
I have always believed that the only future that world peace has is a future based on justice and that if we try to jump over justice, or avoid it, or leave it on one side, however workable the decision may be, it will not be just, and, particularly, it will not be just to the individual citizens affected.

Sir Barnett Janner: I am obliged to the hon. Gentleman for giving way. I disagree with his statement about Israel. Does not he agree that the example that is being set by Israel today is outstanding, as far as the United Nations is concerned, both culturally and in every other sense?

Sir H. Legge-Bourke: The only people who can answer that question effectively are the 1 million or more Arab refugees. Until the problem of the refugees is settled, that decision by the United Nations will never be justified before posterity.
The hon. Member for Dover (Mr. Ennals), who is not, I regret, in his place, proceeded to praise various members of the United Nations overseas forces or organisations for what they are doing on the Syrian frontier or for what they could have done in the Congo and elsewhere. But I wonder how many world disputes since 1945 would not have happened at all if demagogues had not known that there was a forum before which they could turn minor issues into world issues overnight.
This is a problem of the United Nations that we must face. Is the organisation not in itself an open encouragement to demagogues to misuse it? When they do misuse it, is there not grave danger of their blowing up into international issues what are really local problems?

Mr. E. L. Mallalieu: Does not the hon. Gentleman's argument about the United Nations also apply to Parliament?

Sir H. Legge-Bourke: Of course, that is true. But that is no argument for taking an issue to a greater forum, although it may be an argument for keeping it away from this forum. This is one of the great problems democracy must face. The question is whether democracy works better because, automatically, anyone who has a demagogic nature can air an issue in public. I doubt whether this does result in democracy working better. If an hon. Member and I have a dispute with each other, is the best way of settling it to go into the nearest market place and ask the B.B.C., the Press and the newsreels to watch us? I do not believe that it is. I believe that we could probably solve some problems much better if we got together quietly and talked them over, perhaps even with a little alcoholic stimulant.
The speech of my hon. Friend the Member for Beckenham (Mr. Goodhart) confirmed my worst fears about what goes on in the United Nations. I wonder whether any hon. Members have read the remarkable book "A Shade of Difference", by Allen Drury. It is a sequel to "Advise and Consent", of which an admirable film was made. I read the book with the greatest fascination. I think that M 7. Drury is a very experienced Washington correspondent with some idea of how the United Nations goes about its work.
What my hon. Friend says more than bears out the stories about the ramifications behind the scenes at the United Nations, and how any sensible decision emerges therefrom is an everlasting source of wonder. But how my hon. Friend can support this Motion I do not know. If his description of how things are done on the inside of the United Nations is true, then the United Nations is not fit to be put in charge of a peace-keeping force.
The main burden of the Motion is whether there should be a peace-keeping force permanently in existence and run by the United Nations. I say at once that to have such a force with the United Nations not possessed of sovereign power would be nonsense. If we want a force of that kind, then the United Nations has to be given sovereign political power in the use of the force.
Who would exercise that power? Would it be the Security Council? But who are the members of the Security Council? They are representatives of countries some of which may be the countries against which the force might have to be used. The more one follows the logical consequences the more preposterous this suggestion becomes. No one would doubt the sincerity of my hon. Friend the Member for Wavertree, in putting down his Motion, although he has Government experience which, one would have thought, would have deterred him. But I say to him that the Motion is a great deal more dangerous than it looks at first glance. He is really saying that he wants the United Nations to become a form of world government.

Mr. Tilney: I would ask my hon. Friend one question. Suppose this country had been unable to respond to President Makarios's request last Christmas for assistance in Cyprus, and suppose that there had been an international force available. Would my hon. Friend have denied the use of that international force and preferred a Turko-Greek war?

Sir H. Legge-Bourke: I am always careful about answering hypothetical questions which bear no relation to the reality of an event already past. An international force did not exist. Nor was it a question of British forces not being available. It may be that, had an international force existed, and had the United Nations been possessed of powers which it has not got today, I would have thought differently about the situation from what I think about it now after the event.

Mr. Tilney: Would my hon. Friend now therefore withdraw the United Nations Force and let the Greeks and Turks fight it out?

Sir H. Legge-Bourke: That is not my solution to the Cyprus problem. We are getting very wide in the debate. If my hon. Friend wishes to debate with me what I would do in Cyprus I answer that what he suggests in his question is not my solution. My belief is that the Cyprus problem is essentially political rather than military and that someone must keep peace long enough to enable a political decision to be arrived at. I leave it at that, except to add that I believe that Britain is the country most


suitable to maintain law and order in Cyprus, difficult though that task has been, as we all know.
Now I return to the issue of a permanent standing force for the United Nations. Who would order its use? How would it be trained? Who would pay for it? How would it be manned? If Britain were to contribute manpower, how could we do it without imposing conscription again? These are all questions that must be answered by the Government, who, I understand, intend to accept the Motion. The House is entitled to know the answers.
In the present situation, the contributing countries to the United Nations, especially those who are members of the Security Council, could be those against which the force might be used. The United Nations, in its present form, is incapable, however, of managing a force of this kind. Therefore, do we want the United Nations to be reformed in such a way as to enable it to operate such a force? I hope that my earlier remarks have established the fact that I would not wish to see the United Nations so reformed.
I believe that international cooperation is the only possible way for the future of the world. But where is that co-operation to come from? Where are the foundations upon which it must be laid? The foundations are science and technology first of all, coupled with a trade policy which enables every country to be as strong as possible. There are not many things which the United Nations has done of which I approve, but there is one thing that it has done twice in the General Assembly.
In December, 1957, and August, 1958, the United Nations passed a resolution endorsing the five principles which had been drawn up by India and China and, I think, later subscribed to by the Soviet Union, which were as follows: mutual respect for territorial integrity and sovereignty; non-aggression; non-interference in internal affairs of an economic, political or ideological character; equality and mutual benefit; and peaceful co-existence. Those principles have twice been uanimously endorsed by the United Nations. The United Kingdom, the Soviet Union and the United States voted for them.
What has been done to implement any of those principles? Virtually nothing. Just so long as countries go on using any international organisation—be it the United Nations or any other—for purposes inconsistent with those principles, just so long will that organisation endanger world peace rather than improve it. If we believe in the individual liberty of man, and if we believe that the more we tend to take away the responsibility of individuals the less likely they are to be ready to exercise a sense of responsibility, then it seems to me that what we want to do in order to encourage international co-operation is to stress the importance of the individual's approach to life and of the individual's sense of responsibility by individual people, by countries and by members of groupings.
However, the bigger we make it the more difficult it will be for the individual to preserve any self-respect, let alone act with individual responsibility.

Sir D. Glover: If my hon. Friend carried his argument to its logical conclusion, surely he would bring in a Bill tomorrow to disband the police force.

Sir H. Legge-Bourke: This is exactly how the argument is distorted by those who are dedicated to internationalism.

Mrs. Anne Kerr: The hon. Gentleman said just now that he was.

Sir H. Legge-Bourke: I am not suggesting for a moment that there is not need for machinery to deal with the scoundrel. We must have such machinery. The question is: how do we control it? That is the issue here. The question before us is whether the United Nations, by its past conduct, has shown itself fit to do this, and my argument is that it has not, tragic though that is.
I was weaned in war, like a great many hon. Members. I have lost members of my family in war, as I know many hon. Members have. I detest war with a loathing which I defy anybody to match. However, if I felt that the United Nations was the best hope of preserving peace, I would support it with all the vigour at my command. All that I am now prepared to do is to say this: as long as the United Nations exists, Britain must be a member of it. If while a member of it


Britain can improve the behaviour of the people in it, well and good, and all power to us for being able to do it.
I imagine that from what I have said no one will believe that my hopes that we shall succeed are particularly sanguine. More is the pity. But let us not imagine that it is safe for the world to go on trusting in the United Nations, judging it only by its past record, and not facing the realities of our time. The best thing that we can do to strengthen the peace of the world is not to throw our whole concept of national sovereignty into the international melting pot. Rather it is to strengthen our own forces and to exercise our influence as strongly as we can.
The only hope that we have of doing that is to ensure that we have a sound economy so that we can afford to do it. The strength of a nation's foreign policy depends on the strength of its economy. So long as we have trade policies which are outdated—and heaven knows ours are that—and so long as our economy is geared less efficiently than modern science and technology would enable it to be, so long are we endangering the peace of this country and of the world. However good the international organisation, nothing is a substitute for what we ourselves can do, and in doing it we ought to exercise our own personal sense of responsibility.

6.5 p.m.

Mr. Philip Noel-Baker: I must apologise to the hon. Member for Liverpool, Wavertree (Mr. Tilney), who moved the Motion—he will read this in HANSARD perhaps—that I could not be here to listen to his speech. I was taking part in a luncheon in honour of Mr. Judd, who is retiring from the post of Director-General of the United Nations Association. I hope the hon. Gentleman will regard that as an appropriate and sufficient explanation.
I will not comment much on what the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) said, although in the few and scattered remarks which I can make by ten-past six I will try to answer one or two of his most important questions. He will not expect many hon. Members to agree with his essay in nihilism.
I should like to say how much I share the view of the hon. Member for Devon, North (Mr. Thorpe), who speaks with such authority from the Liberal bench, about the Security Council and, as I think, the Economic and Social Council, too. The Security Council should now be increased in number. I hope that the British delegation will propose and urge that in the Assembly which has begun. I saw the Council of the League of Nations increased from eight to ten and then to fifteen members. It was a far more effective body when it was larger. I see no reason why the Security Council's number should not be increased to 18, which the hon. Gentleman proposed. I would increase the number of the Economic and Social Council to 20 or 25. I believe that its long sessions would benefit by a wider representation of the almost 120 members of the United Nations.
All the United Nation's work, in the General Assembly and, as I think, in the Security Council and its agencies, is parliamentary work and should be done, not by civil servants—it is not fair on them—but by people with parliamentary experience and training. As for demagogues, I would say to the hon. Member for the Isle of Ely that in any assembly demagogues pretty quickly find their level, and in the General Assembly more quickly than elsewhere.
I hope that the Minister of State who is to reply to the debate will go to the General Assembly. I am sorry that he is not there now. I understand that the Opposition would give him a pair. I hope that my hon. Friend the Member for Kettering (Sir G. de Freitas), who has been nominated to the delegation, will likewise go. It is planned that he should go only in the Parliamentary Recess, but I cannot believe that the Opposition would not give him likewise a pair.
On finance, I hope that hon. Members will make a great effort to try to get into true perspective the money which we spend on the United Nations—£12 million a year, or if one adds the financial institutions in Washington, £23 million. But when one adds the financial institutions, as the Leader of the Opposition did in the summer, we must remember that they saved us from disaster after Suez and that they are helping to save us from disaster now. We get an immense return for the trifling sums which we spend.
I read some words of the Secretary-General, in which he states that the cash position is "precarious" and that there is a "pressing need" to meet new demands by member States for expanding work programmes. It is "not possible to find in mere budget reductions a remedy for the grave financial situation." On the contrary, adds the Secretary-General, member States must be prepared to accept
a reasonable rate of increase in the annual budget estimates".
For an international force there are already contingents totalling 3,000, a balanced force organised by the Scandinavians. The Dutch and Canadians are following suit. Without any amendment of the Charter, the Secretary-General can recruit a general staff on terms which put them in the same position as the Secretariat, with exclusive loyalty to the United Nations alone. I was present at a conference in Moscow when a Labour and a Conservative Member jointly proposed that system to the Russians. Our Russian colleagues—they were not Ministers, but they were representative people—did not say "No".
I would say to the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) that such a force can be controlled, as it has been controlled, by a committee of the General Assembly. What happened over Suez, what happened over the Congo and what is happening in Cyprus? There is control by a committee of the General Assembly and it works, above all, on disarmament, quite well. It is on these developments that, I believe, future peace depends.

6.12 p.m.

Lady Tweedsmuir: We are indebted to my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney), who has given us a chance to debate United Nations reform. I think that the whole House would wish me in particular to say how much we enjoyed the maiden speech of my hon. Friend the Member for the Test Division of Southampton (Sir J. Fletcher-Cooke). I am sure that his brother, who already sits in this House, will have been particularly proud of him today. My hon. Friend seemed remarkably cool in delivering a maiden speech, much less unworried than I feel at this my first

canter over the foreign affairs course from this Box.
My hon. Friend the Member for Test said that he had considerable experience of serving at the United Nations. Having had the luck myself to be a delegate to the Assembly in 1960 and 1961, I agree with my hon. Friend that it helps to give one an insight into the problems which are included in the Motion which is before the House, namely, the failures and the successes of the United Nations and the need for certain reforms.
I am glad that my hon. Friend the Member for Wavertree spoke in particular of the successful operations of the United Nations, namely, those of the specialised agencies, as did my hon. Friend the Member for Beckenham (Mr. Goodhart). My hon. Friend served on the Third Committee, as I did, but he must have been quite a nuisance if he spent, with others, 150 hours on one subject. The specialised agencies undertake valuable work, which does not often command the headlines, and they command considerable sums of money.
The right hon. and learned Member for Derby, South (Mr. Philip Noel-Baker) has told us that the total United Kingdom contribution to all purposes of the United Nations is nearly £24 million. He proposed the enlargement of the various agencies to reflect the growing membership of the United Nations. When we on this side of the House had responsibility for the United Kingdom delegation, we made exactly that proposal, but, as the whole House knows, Russia blocks any suggestion of this kind until Communist China is seated.
The detailed part of the Motion refers to the need for a small peace-keeping force on a permanent basis. On this, I must from this bench express considerable reservations, as has been done from both sides of the House. I suggest, however, that the purpose underlying the Motion is acceptable, because this was the original intention of the founders of the United Nations and Chapter VII of the Charter lays down the methods by which such a force could be created.
The United Nations really had only one great crusade, and that was Korea. That operation was possible only because, in the first place, Russia walked out of the Security Council and did not


exercise her veto; secondly, the aggression was reported by United Nations observers on the spot; and thirdly, American troops were at once available, backed by a Commonwealth force. After that, the Security Council, meant to be the Cabinet of the world, became deadlocked by the Russian veto. That was how the "Uniting for Peace" Resolution was born whereby power passed to the Assembly.
The Motion draws attention to the ideas of the Canadian Prime Minister on a permanent peace-keeping force. The United Nations is fortunate in having so loyal and distinguished a supporter, untiring in his efforts, to meet the practical and political problems of any form of peace-keeping force. Mr. Pearson recognises that it would be best if the United Nations could carry out the obligations in this respect laid down by the Charter, but he also realises, that for various reasons, these are unlikely to be achieved.
He therefore suggests that a few "middle" Powers should agree to combine in a force outside the United Nations but within the purposes of the Charter; that those countries which subscribe would commit forces over and above their standing commitments; and that those forces would have their own military planning staff, who would be kept ready to respond to a resolution from either the Security Council or the Assembly to keep the peace in any country which requested their presence.
My hon. Friend the Member for Wavertree has suggested certain variants and has called in particular for a force, part of which might be a Commonwealth force, and recruited on the basis of volunteers, as was done for the French Foreign Legion. It is, therefore, important to recognise at once the difference between the permanent powerful force for the enforcement of peace at outlined in the Charter and the sugestion of Mr. Pearson, those also from certain Scandinavian countries and those of my hon. Friend. This appeared to be recognised particularly by the hon. Member for Dover (Mr. Ennals). He thought, as I certainly do, that the smaller forces which are really the subject of today's Motion could undertake only limited police duties in the world as it is today—what my hon. Friend the Member for Wavertree called: "to meet small posses of unrest".
It was proposed by the Canadian Prime Minister that the "middle" Powers should undertake these duties because in certain circumstances the great Powers are not acceptable. The whole House will recognise that if any force is to undertake these duties, a force comprised of "middle" Powers could not control or contain the great Powers. The disparity in strength between the "middle" and great Powers becomes greater as the months pass. Since the United Nations Charter was devised and it was assumed that the permanent members of the Security Council would always be united, nuclear power has altered for ever the balance of power. This was particularly recognised by the hon. and learned Member for Brigg (Mr. E. L. Mallalieu). It has won an uneasy peace and it is today the surest way of protecting civilised society from surrender or war. Therefore, until a real detente is won—an agreement to disagree—followed by gradual and fair measures of disarmament, the small international police force cannot grow into the greater peace-keeping force of the United Nations Charter.
Several hon. Members, in all parts of the House, have recognised that that small force would meet many difficulties. A notable example on this side of the House was the speech of my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke), who appeared to be completely against such a force. I mention also the hon. Member for Liverpool, West Derby (Mr. Ogden) and the hon. Member for Renfrew, West (Mr. Buchan).
There are the practical problems of training men together from six or more "middle" or uncommitted countries—for instance, to choose a base which is acceptable to all, to learn widely differing techniques of operations in jungle or desert, logistics and civil administration. Above all, there are the acute problems of political control: how to be sure that the internal responsibilities of member States are not violated; that Governments are not kept in being who would otherwise be deposed. Even the "middle" power of Canada, as her Prime Minister makes clear, has the problem of acceptance.
I remember that when the Canadian troops were to go to the United Nations force in Suez General Burns described the conversation that he had with President Nasser, and he relates how the latter


had some misgiving about Canadian participation because he said:
Canadian soldiers were dressed like British soldiers and were subjects of the same Queen".
This, he thought, would be confusing in the extreme to the Egyptians, and so it shows that even the Queen's Own Rifles of Canada sometimes have the problems of acceptance. Above all, there is the tenuous political control over the operations of a far-flung force which must take decisions on the ground, yet must receive guidance, even directives, from the Secretary-General in New York who at these times is invested with the powers that often a Roman Emperor was never given. Perhaps it would be appropriate at this time if I said that I am sure on behalf of all hon. Members we hope that the Secretary-General U Thant will soon be on the way to recovery from his illness.
Even, of course, the recruiting of a foreign legion has special problems. The French Foreign Legion, with the tradition of 130 years, did not demand French nationality. In 1943, in North Africa, when the Legion faced the German Army, its German members were offered postings to the rear if they wished, rather than fight their own nationals, and many did exactly that.
Then there is the serious problem of finance. If this small peace-keeping Force is only to be subscribed to by those who joined, as the Canadian Prime Minister suggests, with no doubt acceptable voluntary contribution, does it not mean that the "middle" or so-called uncommitted nations, which form its ranks, will always be head over heels in debt? It is the present Secretary-General who said at Denver in April of this year
It is often suggested that the time has come for a permanent international peace-keeping Force to be established under the United Nations. Obviously this would be a great step forward, but I do not believe that the time has yet come for such a radical advance.
However, in this country we have always responded to the United Nations' call for help. With our world commitments, I doubt whether we would ever be able to allocate particular units in advance, and I think that it would be of particular interest to hear from the Minister of State tonight whether he feels that the new Government could allocate particular units in advance, or, if not, whether they

would consider that which we considered, which was whether we could have ready certain supporting columns which would meet the difficulty of the non-acceptance of one of the great powers. We have, of course, called several times for the strengthening of the Secretary-General's military staff, and we are the second largest contributor to the United Nations finances for peace-keeping operations.
Today I asked a Parliamentary Question of the Minister of State on Her Majesty's Government's attitude to Article 19 of the Charter which lays down that any member State which is over two years in arrears for subscriptions to the United Nations for all purposes shall be deprived of their vote. I think that the House as a whole must have been impressed by the firmness of the Minister of State's assurance that the Government accepted the principle that all operations, whether peace-keeping or not, as laid down by the International Court of Justice were in fact a burden on the assessment of individual nations.
When I went on to ask the Minister of State whether he could give more details of what has happened during the two months' postponement, he said that it was a very difficult and delicate matter and he did not feel at the moment able to enlarge upon it. I suggest to this House that when we have a debate on the United Nations reform, of which one of the major problems is, of course, finance, the Government should be, able to give us some idea of what they will do during the next two months. What will happen, for instance, to their attitude to the Afro-Asian proposal, 59 nations in all, that this subject shall be shelved completely, not discussed again, in order that the Assembly shall vote and work normally? Surely this House is entitled now, as always, to have some knowledge of what is the thinking of the Government.
I ask the Minister of State to address himself to this problem when he comes to reply, because these are vital matters and must affect any considerations for a police force which is under discussion now. Of course, this is a new situation. The Government have appointed a Minister of State in the person of Lord Caradon to represent this country at the United Nations, and then seem to imply that this is an improvement on previous arrangements. But we had a permanent ambassador who was there all the time,


and we sent, in addition, a Minister of State to lead delegations at the United Nations, quite apart from any invitation to the Foreign Secretary. I would, therefore, say that the position of Britain, represented only by a Minister of State and not by an ambassador and a Minister of State, has in fact been demoted and not enhanced, as in our time.
I shall not speak longer on this issue, except to say that I think we should all agree against assigning to the United Nations powers which are beyond its capacity. Because the United Nations must be saved from its friends as well as its foes. After all, the Charter makes plain that the United Nations is an association of sovereign States. It is not a sovereign body in itself; it is not even an alliance.
The United Nations is still young, but nineteen years old. For myself, I am quite sure that it is a unique forum in which one can work with the leaders and potential leaders of 115 countries in a way in which one cannot conceive that one could otherwise do so. To all those who express doubts about the United Nations, surely it is a remarkable achievement that so many countries of differing beliefs and race can agree to meet and debate those things about which they care most. If we seem only to edge but very slowly towards a mutual perception of our common needs, at least we try, and, perhaps, by so doing, we shall at last learn to accept each other for what we are.

6.29 p.m.

The Minister of State for Foreign Affairs (Mr. George Thomson): It is quite clear from the immense interest which has been shown in this debate that the whole House is grateful to the hon. Member for Liverpool, Wavertree (Mr. Tilney) for giving it the opportunity to debate this Motion, and, if I may say so, for the extremely thoughtful and forward-looking way in which he introduced it.
Like the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir) and other hon. Members who have spoken in the debate, I also would like to offer my congratulations to the hon. Member for Southampton, Test (Sir J. Fletcher-Cooke) on his excellent maiden speech. It seemed to me to be thoughtful and witty and urbane and a pleasure to listen

to. He is a most distinguished former overseas civil servant, and I am quite sure, in the light of his speech, that we all look forward to hearing from him again and to his becoming an equally distinguished Member of this House.
The Government are particularly glad that the first foreign affairs debate in the new Parliament should be devoted to the subject of the future of the United Nations and to the possibility of its growth and its becoming a more effective world peace-keeping authority. The United Nations, as the House, I think, knows, enjoys a central place in our thinking about Britain's foreign policy. That is evidenced by the fact that my right hon. Friend the Prime Minister, immediately on assuming office, made special appointments in the new Government of a Minister of State to lead the United Kingdom delegation to the United Nations and a Minister of State to lead the team at disarmament talks.
The noble Lady has begged leave to doubt whether this is an improvement on the arrangements under the previous Government. I would only say that perhaps the best immediate judges are those who are actively participating in the affairs of the United Nations themselves, and certainly these appointments have roused a great deal of interest and enthusiasm at the United Nations as an earnest of the desire of the new British Government to support and strengthen the work of the organisation for peace.

Mr. Peter Thomas: Was not my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir) right when she said that the effect of the appointment of a Minister of State to the United Nations means that he has replaced a grade 1 ambassador and that that, in turn means that our representation in the United Nations will be a grade 1 ambassador less?

Mr. Thomson: The hon. Gentleman is simply repeating, perhaps with less charity, the arguments we have had from the noble Lady. I, for my part, am saying that as of this moment the best way to judge this matter is by the kind of impact there has been at the United Nations itself. I do not think that there can be any doubt, looking at the matter objectively and apart from personal opinion, that these changes have been extremely welcome at the United


Nations, or that it is accepted there that the new British Government in fact, in their all-over thinking on foreign affairs, give greater emphasis to the United Nations than the previous Government did. I think that this is a fact, and it is now up to us to live up to those hopes which we have inspired at the United Nations.
No country, in our view, has a greater interest in peaceful, stable and prosperous conditions throughout the world than the United Kingdom. Ever since the First World War, it has been clear that a peaceful and prosperous world can be secured only by developing an international instrument capable of preventing conflict, and I think that this is the historical evidence which weighs so heavily against the arguments put by the hon. Gentleman the Member for the Isle of Ely (Sir H. Legge-Bourke). We believe, for our part, that it is only through the United Nations that such a system of international prevention of conflict can be developed. We believe that the United Nations can be a powerful instrument for constructive change in the world. We believe it is one of the most important ways in which the gap between the rich and poor nations of the world, of which the hon. Gentleman the Member for Wavertree spoke in his opening speech, can be bridged.
I have been asked by the hon. Gentleman the Member for Devon, North (Mr. Thorpe) to give some more information about what the Government are doing about our contributions to the United Nations development decade. Despite our present economic difficulties, and despite the fact that there is a dispute over the future financing of the United Nations, the Government have already pledged themselves to increase their contributions to the United Nations technical assistance programmes.
We are, in fact, the second largest contributor to the Development Decade programmes of the United Nations. I can tell the hon. Member for Devon, North that, according to the United Nations' definition in regard to a country's giving 1 per cent. of its gross national product for aid policies, we are just about the 1 per cent. mark. It is true that France does better than we do, but we do much better than most other major Western

countries, and I think that that is the general position.
Now, what I have said about the importance we attach to the United Nations and about how its support is in the interests of this country ought, I think, to be so obvious that it hardly needs stating, but this is why I was particularly glad that the hon. Gentleman the Member for the Isle of Ely intervened in this debate. I think that the danger of debates in this House about the United Nations is that they attract nothing but the enthusiasts for the United Nations and give less than an accurate impression at the time of the opinion throughout the House of Commons.
I would not have stated the obvious if it had not been that we do find it difficult, as the hon. Gentleman the Member for Devon, North reminded us, to forget the speech which the present Leader of the Opposition made at Berwick, when he was Foreign Secretary in 1961, in which, with a great deal of close reasoning, he openly doubted whether it could be in Britain's interest to support the United Nations.

Lady Tweedsmuir: Will not the Minister agree that that was a very balanced speech? It surely is not right that this country, above all, should uncritically accept everything the United Nations does? Criticism can be friendly. That was exactly what it was, and it was constructive, too.

Mr. Thomson: I have just finished reading that speech again, very carefully. It was a very considered speech. It was a speech which did us immense discredit in the eyes of the world. There is no doubt about this at all.
I was about to go on to say that I was glad to notice that neither in the speech of the hon. Gentleman the Member for Wavertree, nor in the speech we have just listened to from the noble Lady on the Opposition Front Bench, was there any sign that those views of the present Leader of the Opposition in 1961 are still being reflected. There was some grumbling from below the Gangway, but I hope that we can take this to be a sign that the opinion of the Conservative Party about the United Nations has significantly shifted, and that the Government, when they proceed to develop their programmes for strengthening the authority of the


United Nations and for a greater and more imaginative participation in the work of the United Nations, will enjoy the support of the Opposition.

Mr. Peter Thomas: Was not the main criticism made in my right hon. Friend's speech to condemn a tendency of certain members of the United Nations to advocate force for the resolution of conflicts between nations, and would not the hon. Gentleman agree that any such tendency should be condemned?

Mr. Thomson: I do not want to get too much bogged down in an attitude I had hoped the Conservative Party was leaving behind, but the point of the speech to which my attention was drawn was this, that the Leader of the Opposition said:
This question which many sober and responsible observers of the practice of the United Nations are asking is, whether we can continue to urge support of the United Nations and whether the United Nations of the authors of the Charter has had its day.
Those are extremely grave words to be used by the Foreign Secretary of Britain.

Mr. Peter Thomas: The hon. Gentleman is not being fair, in that he is only reading an isolated passage from a very well-considered speech. In fact, the matter which my right hon. Friend condemned most and criticised was, as I say, the tendency of certain members of the United Nations to advocate, through resolutions of the United Nations, force for the settlement of disputes between nations.—[HON. MEMBERS: "Suez."]— This was, in particular, about a resolution over Goa.

Mr. Thomson: I think that all members of the United Nations have their faults, in terms of their record of support of that organisation and I do not want to make an unduly controversial speech. But I do believe that the Leader of the Opposition's speech showed lack of an imaginative response to the changing nature of the United Nations and to the changing nature of the world in which we have to live and in which I think Britain has an immensely constructive contribution to make.
While, admittedly, the United Nations remains an imperfect preserver of peace, we in this country must continue to safeguard cur own interests and security in association with our allies, and consistent

with the provisions of the Charter of the United Nations. But let there be no uncertainty on this point: the Government do not belong to the doubters or fainthearts about the United Nations. We believe that it is the hope of the human race, and we shall work constantly to strengthen its work for peacekeeping, for disarmament and for economic development.
We shall be ready at any time to look at proposals, which are practicable, in agreement with our friends and allies, to improve the Charter and organisation of the United Nations. It is the Government's particular objective to do everything they can to strengthen the peace-keeping capacity of the United Nations.
Although, in our view, the previous Government may not always have fully entered into the spirit of the United Nations, it must be said in all fairness that all British Governments have always observed the letter of their financial obligations to the organisation. In the past, we have paid our full share of the assessed contributions and have also made voluntary payments to peacekeeping operations which have taken place so far.
We are playing a prominent part in Cyprus. In addition to providing troops and their support, the present Government have recently agreed to airlift another national contingent free of charge as an additional contribution to this United Nations' effort. I should like to pay tribute to our troops in Cyprus in their r rôle as United Nations' soldiers. It has not often been an easy rôle but they have shown characteristic patience, cool-headedness and good humour, and we in the House are proud of them.
It would be idle to pretend that it will be easy to work out an effective peacekeeping system. The conflicting and strong views of all members of the United Nations have to be reconciled. The Soviet view is that peacekeeping lies within the sole purview of the Security Council. Our view is that the Security Council has a primary responsibility for peacekeeping, but that it must be possible for the General Assembly to act if the Security Council fails to do so. This is the root of the present political and financial crisis. The Soviet Union and its allies are refusing to pay their share of the expenses of the peacekeeping


operations in the Middle East and the Congo. As the hon. Member for Devon, North indicated, the General Assembly upheld with a large majority the advisory opinion of the International Court that these expenses of these peace-keepings operations should be considered expenses of the organisation.
As I explained at Question Time this afternoon, the Soviet Union is over two years in arrears in its payments, and under Article 19 of the Charter in our view is liable to lose its vote in the General Assembly. I want to emphasise to the House that in our view this is not a cold war problem, and we are not approaching it as such. It is a vital matter of principle for all who believe in the strengthening of the United Nations. We believe in the collective financial responsibility of the United Nations and the right of the General Assembly to assess the contributions of member States.
At present, the General Assembly is in session in New York. The noble Lady pressed me to go into greater detail than I did earlier this afternoon, but I hope that she will understand that my reticence to go into detail is simply a desire, which I am sure the House shares, that the negotiations going on at present should come to a successful conclusion, There is an understanding to the effect that issues other than those which can be disposed of without objection will not be raised while the general debate proceeds. In close co-operation with our friends, we are trying to reconcile those opposing views which I have mentioned in the negotiations which are taking place. With the United States, we put joint proposals to the Soviet Union as far back as last March.
Her Majesty's Government are working on three lines. First, we are seeking a solution of the immediate financial crisis, without which no progress can be made. This involves not only clearing up the legacy of the past but also making satisfactory arrangements for the future. This means an agreed solution to the problem of payments for operations with which certain members do not agree. We wish—I emphasise again—to achieve a settlement which will not be a victory over the Soviet Union but which will be seen as a success for the United Nations as a whole.
Secondly, we see the need for the strengthening of the permanent United Nations headquarters military staff, to which my hon. Friend the Member for Dover (Mr. Ennals) referred. As the Secretary-General said in the introduction to his annual report, there is much which needs to be done to ensure better, more efficient and more economical peace-keeping operations in the future. In our view, this is a task for an enlarged military staff. At present, it is too small for this purpose, although its achievements under the direction of General Rikhye have been remarkable, given this lack of resources.
Thirdly, we are giving wholehearted encouragement to those countries which have earmarked forces for United Nations duties. The Canadian Government, which has been in the lead in this matter. was host to an international meeting on United Nations peace keeping in Ottawa from 2nd November to 6th November. Twenty-two countries which had contributed to United Nations peace-keeping operations took part in this working meeting on the technical and military aspects of peace keeping.
As the noble Lady has explained, we could not be a participant at this meeting because the permanent members of the Security Council were not taking part in the conference. But we regard the conference as of the greatest importance and, like the noble Lady, we very much support the initiative of the Prime Minister of Canada in this matter.
While we are at the moment playing our full part in United Nations peace-keeping through our participation in the Cyprus operations, we are also looking into what it would be possible for Britain to do in this respect in the future. This is a matter about which the noble Lady asked me for further information. She will appreciate that what we can do has to be agreed with our friends and has to be agreed with the Secretary-General of the United Nations. We are anxious to do only what the United Nations feels that it is helpful for Britain to do, but we are studying closely ways in which this country may make assistance more readily available when required for United Nations peace-keeping operations, with particular emphasis on the provision of logistic support. Lord Caradon, at the United Nations, is keeping in the closest


touch with Commonwealth representatives on this and other United Nations problems.

Sir H. Legge-Bourke: Will the hon. Member go a little further and answer this question? If the present recruiting programme for the Armed Forces which we require for our own safety does not produce the number of men needed, are the Government seriously considering whether they would be prepared to conscript men to serve with the United Nations?

Mr. Thomson: I hoped that we might avoid getting on to that issue. The Government have said that we do not believe that the kind of military commitment which faces this country, either in the national sense or in terms of a United Nations commitment, involves any question of conscription.

Mr. Gilbert Longden: I am grateful to the hon. Gentleman for giving way, because I have been trying to raise this among other matters for the last three hours. It concerns Chapter VII of the Charter. That chapter includes the forcible sanction machinery which, as the House knows, cannot be put into operation unless and until special agreements have been entered into by the five Powers. I have been told for several years now that Chapter VII cannot be implemented because the Russians refuse to enter into those agreements; and that was the position until last July. But on 10th July last there was a letter—I have a copy in my hand—from the Russian representative to the Secretary-General advocating that these special agreements should be entered into. What are the Government's views in response to that offer?

Mr. Thomson: I am sorry, but I should require notice of that question. Perhaps the hon. Member would care to put it down on the Order Paper, if he wishes. Otherwise, I shall write to him fully at the conclusion of the debate.
The Motion speaks of setting up a permanent international force which would be ready for immediate employment in areas of actual or potential conflict. As the noble Lady said, we must first of all draw a distinction between the kind of force involved. On

the one hand, there is the force which would ultimately be used as a peace enforcement force, by the United Nations and which could be provided only after the achievement of a very substantial degree of disarmament—the kind of force which could intervene in the great Powers' struggles. One must try to distinguish between that, on the one hand, and what one regards as a fire brigade force, on the other. There has been general agreement in the debate that what we are discussing is the second type of force.
Even with this more limited type of force one must draw a second distinction—between a permanent force, directly recruited, and a force built up on the basis of standby arrangements by the earmarking of forces by members of the United Nations. The noble Lady set this out in her speech extremely clearly. As to a permanent force for fire brigade purposes, this is the ultimate aim which Her Majesty's Government fully support. We are urgently seeking means to move towards this.
However, both the Secretary-General of the United Nations and the Prime Minister of Canada, who are both referred to in the Motion, have themselves said that they consider that the time is not yet practicable for the achievement of that kind of permanent force. Mr. Pearson has proposed, as a next best—and I think that it is conceded to be a second best—that all member Governments should have elements in their armed services which are earmarked, trained and equipped for United Nations service. That is the standby force I have been mentioning.
A standby force of this character seems to us at present the most practical way of making progress, especially if it could be combined with a strengthening of the headquarters members of the United Nations military staff. The Secretary-General has stated that we must strengthen the system we have and develop the means which are currently at our disposal to deal with present dangers. This, as I have said, is the approach being made by Her Majesty's Government. We will pursue this aim, not in any starry-eyed or head-in-the-air way that ignores the rocks on the path we must tread, but persistently and boldly.
Apart from the immediate financial problems, there are immense practical difficulties. As U Thant stressed, if one were to move towards a permanent international force this would, as the hon. Member for the Isle of Ely pointed out, involve a substantial surrender of sovereignty by nations.

Mr. William Baxter: I appreciate my hon. Friend's point about having standby forces comprised of various nations under the United Nations. Would such a force ultimately become, if not soon become, a mixed-manned force? Would my hon. Friend go so far as now to subscribe to the idea that if there were standby forces of all nations within the United Nations, those forces would eventually comprise a mixed-manned force?

Mr. Thomson: There are all sorts of technical variations involved in this. Certainly a permanent force would be a mixed-manned force. It would be a force not of mercenaries but of crusaders, a word which has fortunately crept into the debate.

Mr. William Warbey: My hon. Friend has been talking about a standby force which might be used for what he described as fire brigade activities. As most people, when talking about fire brigade activities, generally think of military or police force activities in Asia, Africa and Latin America—in other words, the third world—can my hon. Friend say what consultations have taken place with the countries in the third world concerning the possible use of such a force and the circumstances in which it might be used?

Mr. Thomson: These kind of consultations are going on actively at the United Nations. One of the advantages of having a man with the record and distinction of my noble Friend, Lord Caradon, is that he has a great degree of good will among those members of the United Nations which my hon. Friend mentioned. But we cannot make practical progress until the immediate financial problems of the United Nations have been got out of the way.
I was saying that the problems involved in building up this international force present difficulties of very great complexity. They involve a great deal of

study about how such a force would be directed, its basis in international law, its composition, the rules for its use and the evolution of an accepted body of international law on the basis of which it would operate.
These are a few of the difficulties which require much study. My hon. and learned Friend the Member for Brigg (Mr. E. L. Mallalieu) developed some of the difficulties in his speech. He faced up to some of them in arguing that, in the end, the operation of an international force of this character involves an apparatus of world law in its enforcement as well as in its military intervention. These matters will require a great deal of study.
All these problems must be solved if we are to achieve a world which is safe for humanity. We believe that we will do this by building on what has already been achieved, by building with all the ingenuity and energy we possess. We believe that this country still has an immense influence in the world in these matters and a great contribution to make in constructive peace making through the U.N.
As a first step, we hope to help in setting up a workable system using national, earmarked contingents which will be able to swing into action to deal with crises such as the recent tragedy in the Congo.

Mr. R. A. Butler: When the hon. Gentleman refers to earmarked contingents, does he mean that we will earmark contingents of our Army here?

Mr. Thomson: No, Sir. I have not gone as far as that. I thought that I had explained that we were fully supporting the work that was being done by the Prime Minister of Canada and were actively exploring whether we can assist in this work in a way that is suitable to the U.N. in particular by looking at the possibility of providing logistic support. That is where the matter stands at present.
I make no apology for ending this extremely interesting and useful debate by quoting from the manifesto on which the present Government were elected just over 50 days ago:
For us"—


we said—
world government is the final objective—and the United Nations the chosen instrument by which the world can move away from the anarchy of power politics towards the creation of a genuine World community and the rule of law.
It is in the spirit of that extract that I welcome the Motion and recommend the House to accept it.

Question put and agreed to.

Resolved,
That this House, noting the faults and successes of the United Nations and the view of its Secretary-General that, if it is to have a future, the United Nations must assume some of the attributes of a State, in particular the means to act in areas of actual or potential conflict, calls attention to the need for reforms in the United Nations in particular by the creation by like minded States, as suggested by the Prime Minister of Canada, of a small peace-keeping force on a permanent basis.

Orders of the Day — FINANCE BILL

As amended, considered,

Clause 4.—(GOODS EXEMPTED FROM DUTY.)

7.0 p.m.

Mr. Edward du Cann: I beg to move Amendment No. 4, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on goods which were exempted from duty under the Import Duties Act 1958 on 26th October 1964 or on goods so exempted at a subsequent date.

Mr. Speaker: I suggest that the House might find it convenient to extend the discussion to include Amendment No. 8, in line 35, at beginning insert:
(1) Duty under section 3 of this Act shall not be charged on goods being raw materials used by manufacturing industry in the United Kingdom.
And Amendment No. 9, in line 38, at end insert:
Provided that duty shall not be chargeable on goods which are not available in the United Kingdom.

Mr. du Cann: It is particularly convenient that we should discuss these three Amendments together, Mr. Speaker, for they cover three broad categories of persons and companies who are affected by the previsions of Clause 4. When I say persons and companies I use the terms separately and deliberately, for the greater certainly includes the former and

anything which is done and which affects the position of the great trading companies of Great Britain, particularly if it affects them in any way adversely, must have consequences directly bearing on the standard of living of persons employed in those industries, on their prospects of employment, on the whole economy structure and on the success which we all so ardently desire of the economy as a whole.
The three broad categories of persons and companies to which I refer are, first, those affected under the Import Duties Act, 1958, covered by Amendment No. 4; second, industry in general—Amendments Nos. 8 and 9. The third category is of companies and persons having special individual circumstances which, although not directly referred to in these Amendments, are none the less substantially covered by them, and these I should like to talk about first, and shortly.
They are those companies that are concerned with goods in transit from one place or another outside the United Kingdom to it, or to another country, maybe from short distances or from longer distances, and those companies which had entered into contracts before 26th October. I think I would be right in saying that the imposition of this surcharge, and its effect upon these two specially exceptional categories of companies, is quite unprecedented in our legal history, and we on this side find it very unsatisfactory, to say the least, that special exemptions have not been accepted for these two classes of persons or companies.
I remember that when the Committee discussed this matter I was somewhat chided by some of my hon. Friends—particularly by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid)—because I deliberately refused to paint too black a picture of the consequences for these particular firms of the Government's hasty, unfair and precipitate action. On reflection, I am bound to think that the strictures of my hon. Friend the Member for Walsall, South, particularly and his colleagues, were right, and it is an unhappy matter that special exemption is not made for those companies. As the Liberal Party very properly pointed out, not only in the speech of the hon. Member for Bodmin (Mr. Bessell), but in the way it tabled an


Amendment, it would be perfectly easy to find a method of granting exemption for people who are affected in this way. I repeat that, it is a sad matter that the Government are apparently unwilling to do so.
I turn now to Amendment No. 4. There are two types of exemptions from duty under the Act of 1958. I do not think there is any need to particularise them; one is, so to speak, a blanket exemption from duty for a period of time for various categories of goods, and the other method under the Act of granting exemption from duty relates to individual cases. I think I am right in saying, and I have checked the references with some care and I am sure that the Treasury Ministers present would be happy to confirm it—that this legislation was introduced with the good will and, indeed, the approval of the whole House, for it was thought—and, I believe, thought rightly—that to give exemption from duty to particular industries that wished to import raw materials or appartus that would facilitate, let us say, research, new development, modernisation—or any other word current in the fashionable jargon—would be wise and intelligent.
The sad thing is that the Finance Bill, as it is—and Act as it may shortly become—is apparently in direct conflict with the will of the House as expressed in the Import Duties Act, 1958. There is no logic for not exempting those categories of goods otherwise excluded under the 1958 Act from the incidence of the surcharge. If there is a defence for so doing, we shall be very interested to hear of it this evening, but I cannot imagine any way in which a reasonable and tolerable defence can be made.
It is true, as the hon. and learned Financial Secretary made plain to the Committee, that the Government have now raised certain exemptions which, of course, they failed to think of in the first place, and there are now limited exemptions, under the umbrella of the 1958 Act, in Schedule 2, which relate to articles for scientific research or articles that would be helpful to the blind. We welcome those two exceptions—there is also, of course, the question of aircraft, which was presupposed earlier—but when one looks with care at the detail of the

Fourth Schedule to the 1958 Act it is plain that there are still a very large number of important categories of goods that are to be caught by this surcharge. I dare say that whoever is to reply for the Government will be good enough to list them or will, at any rate, have examined the list, and will certainly agree that the list is broad, long, large and important in the context of the national economy.
I feel obliged to call attention to a point that I have made before in these debates, and which I believe to be valid and of substance. There appears constantly to be a greater concentration on the part of the Labour Government on methods of disseminating wealth rather than concentration on seeking means for earning it and increasing it. The fact that there are as yet very few exemptions under the Import Duties Act, 1958, as affected by the surcharge is a precise example of that. Again, this action in not excluding those goods that are within the ambit of the 1958 Act is unprecedented and unfair.
Our discussion of the Schedule lasted for about 12 hours—a very long time—but I am sure the hon. Gentleman will agree that the discussion was valuable and useful. I hope he will think that it was also constructive—it was certainly intended to be constructive and helpful. But our discussion was somewhat inhibited, perhaps, by reason of the fact that it took place after we had discussed Clause 4, whereas now we are discussing, so to speak, Clause 4 and the Schedule together, which is, perhaps, a happier matter.
As I say, that discussion was long, and we on this side tried to put forward cases that we must still seriously insist merit full exemption from the surcharge, and it is to this end that Amendments No. 8 and 9 are directed. In that discussion, my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), and my hon. Friends the Members for Ilford, South (Mr. Cooper), Shipley (Mr. Hirst)—whom I am pleased to see in the Chamber—Southend, West (Mr. Chan-non), Reading (Mr. Peter Emery), Middleton and Prestwich (Sir J. Barlow) and many others, did extremely good work in drawing attention to the anomalies involved in Clause 4 and Schedule 1.
We discussed about 80 Amendments in all, and the Government, in their wisdom—or, I would say, at their pleasure—decided to accept about six of them. We are pleased to see on the Notice Paper a number of Amendments that give effect to some of the Government's undertakings to the Committee, and for that we are grateful. But the Government's own Amendments, both in Committee and on Report, cover no fewer than 22 tariff heads, and these facts—the great discussion, and the need of the Government to table this substantial number of Amendments to the Schedule—lead one to a certain number of clear conclusions.
First, it is right to say that there was from outside this House, and still is today, in so far as the Government have not met some of our objections in Committee, substantial anxiety on the part of industry about the whole of this Measure, and the way in which it has been framed. I hope that the Government are better aware of that now than some of us think was the case in the first place.
The second conclusion one is led to is that this arrangement under Clause 4 and the Schedule was hastily conceived and without proper thought. The third conclusion to which one comes is that the surcharge and Clause 4 and the Schedule are unfair in their incidence, of which I have given the House two specific examples. I am aware that the Chancellor very properly and clearly pointed out in the debate on the Budget that there was a situation in which there was impossibility of precision and that the Government are to some extent the prisoners of the arrangements they have made. That leads one to ask, if the Government found themselves in such a situation that they could not make definitions which were satisfactory, why did they in the first place introduce this surcharge? I say nothing about the manner of the introduction of it for to talk about that would take a very long time indeed. I hope that the Chancellor is now better seized of the difficulties which I believe he has created for himself.
I turn to our reasons for tabling Amendments Numbers 8 and 9. I have already made the point that we believe the drafting of Clause 4 and the First Schedule is defective. My hon. and right hon. Friends I listed a few moments ago indicated that certain consequences will follow from the imposition. The

first, as my right hon. Friend the Member for Sutton Coldfield very properly pointed out, is that the most modern industries will be penalised to the greatest extent. Inevitably, as the Minister without Portfolio agreed, the tariff list of international standards is somewhat out of date, but that is no excuse for penalising the most modern industries which we want to encourage—not to mention the hard incidence that the surcharge will have on new industries which the last Government did so much to bring to development districts.
The second consequence which must inevitably follow is that prices will be increased. That is why we have suggested that the surcharge should not be imposed on raw materials used in manufacturing industry or on goods which are not available in the United Kingdom. Costs of production will rise following imposition of the surcharge as surely as the Chancellor is sitting opposite and I am standing here, with all that that implies not only at home but for the export effort. We are told in thundering speeches by the Chancellor, and even more thundering speeches by the President of the Board of Trade, that the need is for exports and that the Government will take the initiative to get them. Good luck to them; we shall support them, particularly when they are implementing policies which we introduced, but the right hand does not seem to know what the left hand is doing.
A great deal can be said on Third Reading about rebate, but again, as was indicated in our earlier debates, that cannot have much effect for practical purposes and it in no way mitigates the criticism that the Government will make exporting more difficult by the imposition of this surcharge. In many cases this applies to every category I have mentioned, whether in hardship cases or not. Imports will not be saved, either.
This will mean that the surcharge will have failed in its desired effect in these categories. Many of us in past debates were astonished at the attitude of the Minister without Portfolio, who tried to pretend that the imports we were discussing all came into the luxury category. That is far from the case. I do not think I misrepresent him for I distinctly remember him speaking about luxuries. These are the raw materials of industry—not luxuries—without


which industry cannot survive, cannot thrive and cannot prosper.
The last consequence is that the Government statement in the definitive White Paper, which no doubt was supposed to indicate the whole line of Government policy in the future on these matters by paragraph 6, is completely thrown over. It is worth quoting it again to the House:
So far as imports are concerned a sharp distinction must be drawn between the increase in raw material imports required to service an expansion in production and the disturbing increase in manufactured goods …
That is precisely the distinction which the Chancellor is not drawing in this Measure. We now know that the production target of 5 per cent. or 6 per cent., as it originally was, is thrown overboard and the 4 per cent. is thrown overboard. The Government are throwing overboard their own declared statements of policy and a very unhappy matter that is. Because we thought it appropriate to follow the line of argument which the chancellor and his colleagues announced, we have tabled these Amendments in this particular form.
7.15 p.m.
I pass to the Government's own criteria. I quote again what the Minister without Portfolio said and what was subsequently repeated by the Minister of State, Board of Trade and the Financial Secretary, which served to make the criteria entirely clear. The Minister specified certain conditions, as reported in c. 474 of the OFFICIAL REPORT. He said:
Those conditions are, first, that the items represent anomalies in the sense that they are either materials which have undergone only elementary processes or are foodstuffs and should have been included originally in the exemption list; secondly, they are items in respect of which there is evidence that levying the charge is causing hardship; and, thirdly, they are items the exemption of which would not, in the Government's view, endanger the whole fabric of the scheme by starting a chain reaction through creating a series of other anomalies."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 474–5].
These criteria, we understand, are complementary. This is the Government's definition of the criteria which has been repeated by three Ministers. Many of the Amendments we put forward to the Schedule in Committee, and certainly those we put forward now on Report, would satisfy all those criteria.

Therefore, one is entitled to ask the Government why the Amendment put forward in Committee were not accepted and whether they will not now, in satisfaction of their own criteria, accept the Amendments we have on the Notice Paper today. The Government's criteria may or may not appear sensible in theory. That is a matter of judgment, but in practice, as one easily illustrate, they are the most utter nonsense and are not capable of practical definition.
That leads one to suppose that the criteria if not Clause 4 and the Schedule have been drafted by persons wholly unversed in the practicalities of the business world. It would be easy to give a large number of examples of what mean, but I shall not weary the House by doing so. What I say is fact which can be proved by examination. Why is cement excluded? Why do we have the Government Amendments Nos. 13 and 14 on the Notice Paper? Why do those Amendments not include myrcene and borax which have every much right to be excluded from the surcharge as the items listed in those Amendments?
The Financial Secretary said—and I gave him credit for it—that this was an attempt to secure justice. With his legal experience he knows a great deal about justice. I say that in a fully complimentary sense. But justice is precisely what the Clause is not achieving and still less what the Schedule will achieve. It is perfectly clear from all this sad, unhappy story that there must be a review of the situation soon. The Government have indicated in our earlier debates that there would be a review in due course.
This point has been acknowledged by the Government; I will not quote the references. Time and again the Minister of State, in the admirable replies which he gave, and also the Financial Secretary—I suggest defending the indefensible—said there would be a review in the spring. I am bound to ask, on behalf of my right hon. and hon. Friends—indeed, on behalf of industry and commerce in Great Britain as a whole—why the delay? Why had not the matter been properly thought out in the first place? Why were we presented with a Measure of this sort which has created great anxiety and uncertainty? To hear the Minister without


Portfolio pleading that the Government did not have time to consider these things was to listen to the most arrant nonsense. Why should not Members of the Government work at week-ends? Why not have more Amendments on the Notice Paper? Why do not we have more of these points acknowledged in the form of Amendments?
A particular point which hon. Members on this side of the House find irksome is this. Very well, so there is to be this review. The Chancellor said that he would do what he could to rectify the anomalies, and, of course, we accept what he says. We shall look forward to that future desirable state of affairs, whatever the position now. But we do not think it good enough to ask the House to pass a Measure which gives the Government great discretion, in due course, as to what items they will exempt from taxes and what items they will not. The proper place to have these things in connection with bills and draft legislation is before the House at the time, not in the mind of the Government at a later stage.
We know how unpopular this Measure has been abroad, and there is no need to go over all that again. The Chancellor has created great difficulties for himself over the way in which this matter has been handled. Observers abroad can see quite as plainly as can hon. Members on this side of the House, how unsatisfactory is this list. Had the right hon. Gentleman got it into better shape and accepted Amendments, I daresay that his task abroad would have been substantially eased. The position was indicated the other day in the Sunday newspapers, where it was stated that the incidence of the surcharge we have imposed has proved a disincentive to people abroad to buy from the United Kingdom. This is one of the most serious criticisms of all.
Whatever may be the situation abroad, industry at home is in a state of frustrated anxiety. The home economy will not grow and neither will exports increase in a climate of uncertainty. This Clause and its attendant Schedule are undoubtedly bad law, I think that the Schedule is the worst part. The other day I had the pleasure—the amused pleasure in retrospect—of re-reading an

article in Time magazine recording an interview with the Prime Minister, who at that time was the leader of the Opposition. I quote from what he said.
The Labour Party is like a vehicle. If you drive at great speed all the people in it are either so exhilarated or so sick that you have no problem"—
whoever "you" may be—
When you stop they all get out and argue about which way to go.
I do not know whether that is true. I can only say that we on this side of the House have the impression that it is a very sad matter if the country has been driven hard in this way in order to preserve unity within the Labour Party. I hope—[HON. MEMBERS: "You are the sick ones."] Yes. it is true. We are the sick ones; hon. Gentlemen opposite are entirely right. We are sick for the country, we are sick for British industry and the way this matter has been bungled. I hope that hon. Members opposite will support the Amendments. We believe that they give an opportunity to the Chancellor and to the Government to introduce a note of sanity into what otherwise is, and has been from the inception, a thoroughly unhappy story.

Mr. Geoffrey Hirst: We are all very glad to see the Chancellor of the Exchequer in the Chamber. We know that he had other business to attend to during the Committee stage, and I should think that it was a very hard sell. He will be aware that we spent a very long time in Committee discussing these matters, largely because hon. and right hon. Gentlemen opposite, however pleasant they were, arrived in the Chamber with about 40 briefs and about 33 of them were marked "reject".
I sincerely hope that now the Chancellor is present—the hon. Gentlemen could not do very much about the matter during the Committee stage—he will whisper gently occasionally—I shall take no exception to a bit of chatter on the benches opposite—that perhaps possibly one or two Amendments may be accepted.
I should like to say, "Thank you" to my right hon. Friend the Member for Taunton (Mr. du Cann), who gave us a brilliant précis of the many hours of debate that we had. It could not have been expressed more firmly and more accurately. I sat through most of those


hours of debate and I think it a great pity that we are in this position. I support what was said about the time factor. In any case, apart from the weekend work—I suppose that some members of the Government have some-thing to do at weekends—there was no need for the time factor.
I say again that the time factor is a matter for the Government. It is absurd that hon. Members should be asked to consider the Report stage of the Bill so quickly after the Committee stage, without there having been the proper time for examination, and when the Government have published a Schedule which I am quite certain was a sort of hit-and-miss affair on the part of the Customs and Excise to rescue the Government from the consequences of a ridiculous political decision which had been taken before consultation.
We are faced with the necessity of having to put down omnibus Amendments to try to get some sense into Clause 4 and the Schedule. I support the Amendments, which are not quite the same, but they go over a wide field. I am deeply concerned—I have a considerable constituency interest in the matter—that duty-free machinery, made duty-free for the specific purpose—one had to satisfy the Board of Trade that it could not be procured elsewhere and had a certain technical advantage over any other British manufactured machinery—will bear the 15 per cent. surcharge.
The wool textile business, which is a constituency interest of mine, is a highly competitive industry and because of that, Governments have decided to retain this freedom from duty on the basis of the industry's tremendous record of efficiency. Now there is to be the 15 per cent. surcharge on something which Governments have always recognised as a special case. Other hon. Members will argue the merits of other cases.
I have argued an enormous number of cases during the years in which I have had the privilege of being a Member of this House. I have sat, as a member of committees, with Ministers who have discussed this matter, so I feel very keenly over the fact that this sort of quite irrational approach should have been made in respect of something

fundamental and vital to the competitive efficiency of British industry—something which is far more important than saving the Government's face.
The principle proposed was not accepted by anyone on this side of the House during the Committee stage. It was a principle which, from our point of view, was the Government's principle. I do not understand it and I cannot apply it. I can apply the principle contained in the Amendments before us now, that drugs, or chemicals or whatever may be the raw materials of industry, if they are essential as the Amendments show, shall be exempted.
I have argued that in respect of dozens of fundamental chemicals which are tremendously important and cannot be regarded as luxury goods. If they are not obtainable in this country, and would have to be imported, to impose the duty on them would defeat the economic purpose of the Government and add to the costs of industry. It is shameful that these arguments should have to be placed before the Government again. The only excuse which may be offered—because obviously they are aware of these arguments—is that hon. and right hon. Members opposite were in an unhappy position.
They had to come to the Committee with those marked briefs and they had no senior Minister, neither the Chancellor of the Exchequer nor the President of the Board of Trade, as the heads of their respective Departments, to consult. Therefore, the Committee stage was very prolonged, though I am glad to say that it was good-natured. It was very tiresome and irritating. It did nothing to improve confidence abroad, because the major discussion of these things never does. We are now faced again with the argument that there has been no time, although there has been plenty of time.
7.30 p.m.
What have the Government been doing since last Thursday night? Have they been doing anything? I cannot see that they have been doing anything. There is no answer to our arguments on the Notice Paper, except one very futile Amendment, which I shall deal with when I reach it. The Government have done nothing. But they expect good will from this side of the House. We are being astonishingly gracious. In view of what


we had to bear in debates on Finance Bills when we were the Government, not only from the Labour Opposition but sometimes from our own supporters, I cannot help feeling that we are being extraordinarily gracious. I hope that our attitude will not be misunderstood. We are being gracious as a matter of courtesy. We have very strong feelings, but we do not think that it is necessary enormously to exaggerate or overlard with superlatives an argument which is so painfully clear.
That is what is behind these Amendments. I support the argument advanced by my right hon. Friend the Member for Taunton. I hope that we shall not get tonight the "blank, blank, blank" which we had in Committee. It was wearisome. It did not pay proper respect to the country's needs, nor did it pay much tribute to our sense of managing our economy.

Sir Frederic Bennett: In Committee I was, doubtless properly, ruled out of order for referring to matters which fall more properly to be considered in the discussion on Amendments Nos. 8 and 9. When we discussed the timing of the surcharge, I said that I hoped that I should have an opportunity to draw certain matters to the attention of the House. My right hon. Friend the Member for Taunton (Mr. du cann) expressed in a wide and general sense feelings which all of us on this side of the House possess strongly, but which, so far, have not had even the start of an answer from the Government.
I shall content myself by telling the House of one specific example out of the many which have been drawn to my attention. I must say that, when the 15 per cent. surcharge was introduced and this matter about which I shall tell the House was drawn to my attention, I immediately placed it before the responsible Ministers. Although this was several weeks ago, so far I have received only a formal printed card to what is an absolutely constructive argument in favour of helping a firm which is interested only in trying to prevent a disastrous weakening of its export trade. I shall not give the name of the firm tonight, because, on the whole, mentioning firms' names is not advisable.
There is in my constituency, as hon. Members on both sides of the House may know full well, a firm which has a very

good record indeed in exporting some extremely complicated electrical and electronic precision equipment. For this purpose the firm needs about three items of semi-manufactured components which are not available in this country. There is no way in which the firm can obtain these items in this country. The firm has full order books at present.
The firm supplies this equipment at a competitive price to various parts of the world in very close rivalry with a comparable item from Sweden. The firm only just managed to obtain the order because it quoted 6d. per item cheaper than its Swedish equivalent. As has been pointed out to the Government, the net result of the surcharge will be to raise the price of this firm's equipment by 8d. per item.
Although this fact has been brought to the Government's notice and although there is no question of the firm trying to import any form of luxury or consumer article, these three items being imported by the firm only to enable it to export valuable equipment, nothing has been done by the Government to meet this case.
I suggest that this is an unanswerable case. It is a purely technical one. It is about time that right hon. and hon. Members opposite started to reply in specific terms, because if I happen to be knowledgeable about this one item in a notably non-industrial area my right hon. and hon. Friends must know about many more comparable items.
I have raised this matter tonight not because I believe that the collapse or weakening of the export orders of one firm in a notably non-industrial constituency will make that much difference to our balance of payments, but because I simply cannot understand the attitude of the Government on a matter which surely does not permit of any argument. As these items are imported only to improve our export position, what is the sense in taking steps to weaken our export position without advancing any argument? I hope that the Government will not meet my argument with the counter argument that they have given an exports rebate. In the figures I have quoted the full effect of the rebate has been taken into account.
I hope that in answer to this purely practical example I have quoted, and in answer to similar ones which no doubt


my hon. Friend's can quote, Ministers will be rather more constructive tonight. I cannot believe that they will not take notice of serious points which have been brought to their attention. It cannot be in their interest to be just b-minded on a subject like this. They should try to make their surcharge work. I dislike the surcharge altogether, but, if we are to have it, let us at least try to have it working perfectly. I hope that the speeches which follow my own and the vote which I hope will follow them, unless the Government give way, will result in some sense being written into this part of the Bill for the first time.

Sir Douglas Glover: I was astonished and appalled, on picking up the Notice Paper in the Vote Office, to notice how few Amendments have been tabled by the Government following our debates in Committee. I have a good deal of sympathy with the Minister of State, Board of Trade, because he was kept up until a very late hour in Committee. We sympathise with him, because we understood that he was stalling when trying to reply to many of our arguments.
If the Chancellor of the Exchequer has studied the debates in Committee, he will realise that the case for the exemption of chemicals, pharmaceuticals and wool was made so cogently that it is impossible to understand why he has not tabled on Report Amendments accepting our arguments. Our arguments were not advanced merely for the purpose of debating. They were advanced sincerely and with vigour and determination because we were trying to protect the fabric and balance of British industry.
We pointed out in the debates on item after item that the Chancellor's decision will be prejudicial to our export performance. It was shown time and time again that it would be impossible to isolate the raw materials when pharmaceutical products went for export and therefore they could not get the drawback. The export performance will be reduced rather than increased.
It is wise to reflect on why we are debating this Clause at all. The Clause is designed to reduce imports of things which we can produce or are producing.

It is designed to reduce the import burden. In this I go a long way with the Chancellor of the Exchequer. It is shown, not with evenly balanced argument but almost overwhelmingly, that what is being done will prejudice our export trade. I know that the Chancellor has been busy, but, if he had had time to study the debates which took place in Committee, he would have tabled many more Amendments.
In our debates in Committee the Minister of State kept saying that there would be a review at an early stage. This is a bad way of legislating. If these things are wrong and if they are not in the interests of Britain, they should not be allowed to go into an Act of Parliament if they are to be removed afterwards. The Chancellor ought to look at these items. If he had done so, I am sure that he would have accepted many of the views expressed on this side of the Committee last week. If the Chancellor hardly moves himself at all on any of these vital matters, I am sure that my hon. Friends unitedly will go into the Lobby tonight to show how disastrous we think his present policy is.

Mr. Humphrey Atkins: Like my hon. Friend the Member for Shipley (Mr. Hirst), I want to speak briefly about Amendment No. 4 with particular reference to machinery.
As the Financial Secretary may remember, I addresed myself to this point during the Committee stage and urged him to grant exemptions from this surcharge to items of machinery which are or would have been exempted from duty under the Import Duties Act. In his reply he said something that astonished me. He said:
To apply a non-availability test only to these goods … would be indefensible."— [OFFICIAL REPORT, 1st November, 1964; Vol.703, c. 399.]
I should have thought that it was easy to defend. When considering whether to charge duty under the Import Duties Act, 1958, the Government have applied this very test.
The avowed object of the Government in introducing the surcharge is surely to discourage people, be they manufacturers or consumers, from importing articles into the country which are not really needed. In the case of machinery, one can only


qualify for exemption from duty if one can show that that machinery has some particular quality which is not obtainable in this country and that if it is imported and used in a factory one can do a particular job more efficiently than one could do it with the comparable British machinery. Otherwise one does not qualify for exemption under the 1958 Act.
It seems to me, as several of my hon. Friends have said, quite absurd for the Government, on the one hand, to say, "You must increase your efficiency, we want you to put in the most efficient machinery you can find and export as much as you can", and, on the other hand, to say, "We admit that this piece of machinery is essential to you and, therefore, we will not charge duty in that way. Nevertheless you must pay this surcharge." There can be no question of cancelling machinery for which orders are already placed, and so the machinery will come here anyway. The only possible effect is to increase the cost of production not only for home consumption but also for export.
Although one can claim drawback from the surcharge in certain circumstances, one can not claim drawback on the surcharge when it is part of the general production cost, which one has to meet because of the increased cost of machinery which one is importing. In the case of machinery which appears in the Fourth Schedule to the Import Duties Act, this surcharge is quite indefensible. It is destroying the avowed purpose of the Government. I hope the Government will think again and will accept at least one of these Amendments.

Mr. James Scott-Hopkins: I support my right hon. Friend the Member for Taunton (Mr. du Cann) in the Amendment that he moved. I am particularly interested in Amendments Nos. 8 and 9 concerning raw materials and goods which are not available in the United Kingdom, with particular reference to agriculture and horticulture.
In Committee we had a long and exhaustive discussion of the various agricultural items which are not produced in this country, the essential trace minerals, items affecting the fertiliser industry as well as those affecting horticulture such as the rose and mushroom spawn. The case was extremely convincingly

made out in Committee. It also seemed to me that right hon. Members opposite accepted the rightness of our case. Indeed, it seemed to me that the Minister without Portfolio accepted that we were correct in moving the Amendments relating to horticulture, that they were raw materials, and he conceded that point in columns 487 and 488 of the OFFICIAL REPORT of 2nd December.
7.45 p.m.
In exactly the same way the Minister of State, Board of Trade accepted arguments concerning the insertion of trace minerals. He accepted the suggestion that, as feedingstuffs are exempted from the impost, it is difficult to differentiate and to say that the trace elements should not also be exempted. He admitted also that they had caused him great difficulty. Reference to these matters is to be found in column 598 of the OFFICIAL REPORT of the same date. It seems that the Government have accepted that these items fulfil the criteria and that, therefore, the Amendment relating to raw materials which covers these items should be accepted.
I am in some doubt as to what the exact position is at the moment. My right hon. Friend, when moving the Amendment, said that he thought there would not be a review until the spring. But, as I understand it, we got the Government to move one stage further than that and say that there would be a special review before the spring review by the Chancellor into the working of this Bill. I understood from the Minister of State, Board of Trade that there would be a special review of those items which seem to fulfil the criteria but, as the Minister without Portfolio said, there had not been time for the Government to consider them properly. I thought I saw the Chancellor of the Exchequer shaking his head. Is there not going to be a special review? Does the Minister of State wish to clarify the point?

The Minister of State, Board of Trade (Mr. Edward Redhead): I am sure the hon. Gentleman would not wish to misrepresent what I had tried to convey. I referred to my right hon. Friend's earlier statement in the Second Reading debate, that when anomalies were brought to his attention and when he had no doubt that there were anomalies, they would receive


his consideration. It was those to which I referred. I said that at any time when an established case could be made out that there was an anomaly, it could be dealt with by invoking the provisions of Clause 3(9). I said repeatedly with regard to the others that these matters would be considered when we came to reconsider the coverage of the import surcharge.

Mr. Scott-Hopkins: I am obliged to the hon. Gentleman for having made the position clear. I understand that the items which are of particular concern to agriculture and horticulture fall into the category of items which cause anomalies. I am sure that my hon. Friends will put forward other examples.
As we have seen from HANSARD, the hon. Gentleman has accepted the fact that there are anomalies, since he mentioned that they would be included in the review of anomalies. I am glad that he has cleared up the point. It seems to me that unless the Chief Secretary is prepared to accept Amendments Nos. 8 and 9, the horticultural and agricultural industries will suffer by the incidence of this 15 per cent., surcharge. The raw materials of these industries will be charged. Trace elements will be charged. There will be an extra cost to the industry. The fertiliser industry will have to bear an extra charge as well, and so, indeed, will the horticultural industry unless the Government are prepared to accept Amendment No. 8.
It is the raw material of the grower which will be taxed under this impost unless the Government are prepared to exempt the raw materials which cause the anomaly. Mushrooms come into this country tax-free whereas the spawn does not. There are other examples. If the Government stand firm and do not accept the Amendment this will be an additional cost on the industry, and, heaven knows, agriculture and horticulture are suffering enough increased costs and they are ill-able to suffer an additional cost under the 15 per cent. surcharge.
I hope that when he replies to the debate the Chief Secretary to the Treasury will be able to accept Amendments Nos. 8 and 9. If not, I hope that there will be an early review of the anomalies which are being created for horticulturists and agriculturists. The Government accepted in Committee that there were

anomalies. The present provisions are greatly to be deplored. Unless the Government are prepared to accept that raw materials must not be taxed, the agricultural and horticultural industries will suffer grievously.

Mr. Patrick Wolrige-Gordon: I should like to support my hon. Friends in their Amendments, but from an angle which has not yet been mentioned in the debate and that is the question of unemployment, particularly in the more distant areas and in the development districts. In any event, I find it difficult to understand how a surcharge on essential raw materials and goods which are not available in this country can affect our balance of payments favourably.
It seems to me that if firms are placed in a position where, suddenly, a 15 per cent. surcharge is levied on their essential raw materials, they will have one of two very unpleasant courses of action open to them. Either they will have to stop their importing and, therefore, the whole level of their production in so far as it is affected by those imports, which is to a very large extent in some firms, or they will have to slow down their imports in the hope of better days to come and therefore slow down their whole production programme. They cannot do otherwise.
My constituency is in a development area and there are firms in it, as I am sure there are in many parts of the country, which are now faced with a total cessation of their activities at the very time when we have begun to break through the problem of unemployment in the development areas, particularly in the north of Scotland. This seems to me very hard indeed.
I still do not see what else these firms can do. I hope that we shall have some advice for them from the Chief Secretary to the Treasury when he replies. Their goods have to be carried great distances and for that reason their costs are high. Now, when the country, in a paralysed condition, has elected a Labour Government, these firms have to face this surcharge. Add to this our difficulties with our trading partners abroad and we have a barrier which the export incentive provides no chance of surmounting. I hope, therefore, that the Government will accept the Amendments.

The Chief Secretary to the Treasury (Mr. John Diamond): The hon. Member has asked me to give some information when I reply. I should like to do so very much. The hon. Member has made a serious charge. Could he give some indication of the nature of the business and how it comes about that a 15 per cent. surcharge will close the whole of his constituents' business in one form or another?

Mr. Wolrige-Gordon: I do not think that I should discuss names across the Floor of the House. I have particularly in mind two American-owned companies. They deal in machine-tools and in the gear industry.

Mr. Norman Cole: My hon. Friend the Member for Shipley (Mr. Hirst) said that practically all of us on this side of the House felt strongly about some of the workings of the import levy. I should like to add that a great many industrialists also feel very strongly about the way in which the levy is working out.
I must say in all courtesy that an example I have under Amendment No. 4 has only come to my notice in the last few days and, therefore, there has been no opportunity to obtain the Government's reaction to it. The Amendment deals with articles which were exempted from duty under the Import Duties Act, 1958. I want to emphasise that there can never be justice without an element of flexibility. It is impossible to have the former without the latter, and this Clause in the Bill is a case of endeavouring to obtain the justice of regulation without the mercy of flexibility.
The case I have in mind is that of a machine for use by a firm in my constituency which is not available to the firm in this country. It is used in connection with the manufacture of paper board which is a vital part of industry here. As long ago as 4th August of this year, because the machine is not available in this country, it was given an import-free licence by the Treasury.
I now come to the real rub. The machine arrived in this country on 12th October, 15 days before the operation of the order imposing the 15 per cent. levy. My constituents say that owing to clerical queries raised by Customs and Excise concerning supplier documents the

machine was not cleared until 27th October. I ask the House to note the date. I have also a letter from H.M. Customs and Excise. I am sure that that Department acted entirely within its rights and within the regulations. This is not the point of my plea. My point is that a regulation is not worth its salt unless there is authority to waive it when it is unjust in its application.
Customs and Excise said that the machine was not "presented", which I imagine is a technical term, until 27th October and, therefore, it is liable to the temporary charge. There may not always be machines which come into the country on the actual climatic day of application of a regulation, but this machine was "presented" on 27th October, the very day when the surcharge came into force. As a result there is a 15 per cent. surcharge on something costing over £10,000, which is not exactly a minimal amount.
Amendment No. 4 contains the words:
… or on goods so exempted at a subsequent date".
If the Government, through Customs and Excise, are not prepared to continue an exemption which seemed fair and good to the Government on 4th August when that something is presented on the actual operative date, what likelihood is there, unless there is a change of heart in the Government, that goods will be exempted under the 1958 Act at a date subsequent to 27th October.
I should like to say a few words, also, about what could possibly have been in the Government's mind when they evolved this 15 per cent. levy. I say, taking Amendments Nos. 8 and 9 together, that if the idea of the 15 per cent. levy was to limit the amount of imports coming into the country, that is clear and understood, but it is to be presumed that it was not intended also, at the same time, to limit exports accordingly. The idea was that exports should remain at least at the previous level and preferably should increase and that imports should be lessened.
8.0 p.m.
Amendment No. 8 would provide that
Duty under section 3 of this Act shall not be charged on goods being raw materials used by manufacturing industry in the United Kingdom".
How does the opposite of this, that is, the Government's view as expressed


throughout so far, fit in with the definition which, in all sincerity, I have tried to evolve for what they have done? They are trying to limit imports and encourage exports, and they have given an earnest of this by the 1½ per cent. rebate for exports which, I understand, is as much as they are able to do under present international arrangements.
The term "raw material" is capable of definition in the Bill. Whether a raw material be concrete or the sort of things I spoke about in Committee, the point is capable of definition by a fairly watertight form of words. Such a definition would help the Government in their case and they could, by including such raw materials in the exemption Schedule, assist their whole purpose.
Similar considerations apply to Amendment No. 9. Again, the mind boggles to try to understand the Government's purpose in this matter. Are they trying to solve one major problem by creating half a dozen others? Are they trying to solve the import-export problem—good luck to them if they are—while at the same time leaving a train of repercussions which will cry out for attention? We were told many times in Committee that non-availability in this country was not a relevant criterion for exemption but, in an operation of this kind which everyone admits is an emergency and which the Government themselves say is temporary, the whole purpose being to reduce the amount of imports, why should not the fact that materials cannot be obtained anywhere in this country be a factor to be taken into account? If we were to pursue this to its logical conclusion, the whole of any industry which depended upon raw materials not available in this country would grind to a halt. I am trying to find some pattern in the Government's policy for the surcharge and, with all courtesy, I must say that I find none at all.
I suspect that what will happen—in view of what has happened up to now, I hope that it does—is that gradually every fortnight or every month, more and more goods will be exempted under Clause 3(9) as the Government find anomaly after anomaly or realise that they are cutting their own throat by insisting on the 15th per cent. surcharge. As my hon. Friend the Member for Ormskirk (Sir D. Glover) said, this is no

way to draft legislation. I do not expect that the Government will accept any of these three Amendments tonight, but I am sure that, when the record comes to be read in two or three years, the result of this operation, an operation which could have been so much more beneficial and more efficient, will be seen to have been disastrous.
There is a good deal of sympathy in the country for the Government's broad intention, but it is being rapidly exhausted by the anomalous way in which items have been excluded. I despair of seeing anything better now. I do not think that it will work. The Government will have given themselves a lot of trouble in the next few months and they will miss their target. These things must be said and put on record and, at the appropriate time, we may have good cause to return to them.

Mr. Cyril Bence: I apologise for intervening, but, as an engineer, I resent some of the gross exaggerations which have come from the benches opposite. If the Opposition think that they have a good case in some of their arguments, why exaggerate? I have never heard such nonsense as was talked by the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon). The idea that the putting of a 15 per cent. surcharge on a machine tool of fine quality and high productive capacity will stop anyone importing it and will smash the industry is too nonsensical to be believed by anyone.

Mr. Wolrige-Gordon: Mr. Wolrige-Gordon rose—

Mr. Bence: No, I shall not give way to the hon. Gentleman. He would not give way to me in Committee on the Bill last week.

Mr. F. A. Burden: Childish.

Mr. Bence: Any modern manufacturer in this country is looking for a machine which will give him the greatest possible capacity. He is looking for quick delivery of a machine which is ahead of anything used by other manufacturers in the same business. If he can find such a machine, whether from Sweden, Switzerland, the United States or Britain, he will buy it. He will be right to buy it, wherever it comes from.
The hon. Member for Aberdeenshire, East talked about an industry in East


Aberdeen which manufactures gears. No gear manufacturer in Britain buys his steel from abroad. He buys it from Sheffield, because the finest steels for gears, the best tensile steels and carbon steels, are made in Sheffield, and there is no need to go abroad for them. The hon. Gentleman is talking nonsense when he says that that factory in Peterhead which makes gears or cutting tools has to go abroad for its raw material and pay 15 per cent.
The hon. Member for Bedfordshire, South (Mr. Cole) spoke of a paper manufacturer who bought machine tools for the making of paper.

Mr. Cole: A machine.

Mr. Bence: A machine—that is a machine tool. A machine is a machine tool for the making of paper. The buyer is not likely to be concerned about a 15 per cent. surcharge on a very high capacity machine for his purpose. He wants to get a very high rate of production, and, although this machine cannot be obtained in this country—

Mr. Cole: I am sorry to interrupt the hon. Gentleman, but I must point out that I did not say anything about the 15 per cent. surcharge. I spoke about the justice of the date.

Mr. Bence: I am pointing out that the 15 per cent. surcharge, if the machine is so advanced over anything else, is no deterrent to a buyer who wants to increase his productive capacity.

Mr. Peter Emery: Then why have the surcharge?

Mr. Bence: Because it is far better in this instance to have a blanket surcharge right across than try to discriminate among all sorts of products and machines.
The right hon. Member for Taunton (Mr. du Cann) said that the surcharge on raw materials had the worst effect on the most modern industries. Why? The most modern industries in this country are those which make the most out of their raw materials to the best economic advantage. The profitability from the raw material is so great that the cost of the raw material is nowhere near the biggest item in the resulting product. There is an enormous increase

in value from the raw material to the finished product.

Mr. du Cann: If the hon. Gentleman's argument is true, imports will not be stopped, so the surcharge will have failed of its purpose. But will he look back at the discussions we had in Committee and read the arguments advanced by my right hon. and hon. Friends, particularly my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), which completely destroyed the case which he is now advancing?

Mr. Bence: I remember the argument put by the right hon. Member for Sutton Coldfield. There is always the assumption that the British manufacturer, especially in the highly technical industries, is incompetent to absorb the 15 per cent. In some cases this may be true. It may be true in some of our backward and out-of-date industries, but it is not true in the most modern industries which have highly advanced technical processes.
It is in those industries where the basic cost of the raw material is becoming a decreasing cost factor in the ultimate product. That is why I think it is wrong to throw in the most modern industries as being those which are most adversely affected. I do not believe it. The reverse is true.

Mr. Simon Wingfield Digby: During the early stages of the Bill I listened carefully to the arguments about the surcharge, and at the end of the day I rather agreed with the Minister without Portfolio that it was a blunt instrument. The more I see examples and hear about cases, the more convinced I am of that fact.
I want to speak about an industry in my constituency. I disagree with the hon. Member for Dunbartonshire, East (Mr. Bence) when he says that it is not the most modern industries which suffer. The industry I have in mind is an extremely modern one. It is a new one some of whose processes have just started up here. It is up against very severe competition from the industry in the United States which is very much more advanced. The industry comes under both Amendment No. 8 and Amendment No. 9 in that the raw material has to be imported and cannot be obtained in this country.
The raw material is a rather strange one—glass marbles, which are needed to manufacture glass yarn. The marbles are not obtainable in this country and have to be obtained from the United States. They are manufactured into glass yarn, which is then turned into glass cloth, and that is used for insulation and in aircraft. That is a very modern use. The material is used in various other ways as well. Its use for curtains is increasing in the United States, and the day may come when it will be used for dresses. These are all modern uses.
This little industry is of considerable importance. It is important to my constituency because it is the sort of industry that we want in the small country towns such as I have in my constituency. The industry is expanding, and I want to see it expand further. It is also important because it will enable us to cut imports of products such as curtains which at the moment come from the United States.
When I took up the case with the Board of Trade I received the somewhat strange reply that the purpose of the surcharge was a quick saving in the import bill. That may apply to many things, but I cannot believe that it applies to this industry. If fewer glass marbles are imported, production will be reduced, because glass marbles are the only raw material of the industry. If there is less production, it is equally obvious that there will be larger imports of the finished products from the United States. It so happens that the firm engaged in the manufacture here is controlled partly by a very large firm in this country and partly by a very large firm in America, but in a case like this one is defeating the object of the surcharge by encouraging more imports from the United States.
In passing, I would mention that, in any case, the glass marbles have to pay a 10 per cent. import duty, and so the 15 per cent. surcharge goes on top of that. It seems to me that in a case like this, where an industry is successfully developing in this country, the import surcharge, however necessary it may be for other reasons, can do nothing but harm. From the arguments I have heard this evening, I cannot help thinking that there are many similar cases where exactly this result is being obtained, and

those cases are to be found in the modern industries referred to by my hon. Friend the Member for Taunton (Mr. du Cann).

Mr. Arthur Lewis: Is the hon. Gentleman telling us that one of the biggest companies in this country, and probably in the world, Pilkingtons, cannot make glass marbles? Surely there must be something more than glass marbles in this? We have wonderful firms in this country which can make marvellous things.

Mr. Wingfield Digby: That is correct. However, Pilkingtons was one of the firms from which my constituents attempted to get glass marbles, but the correct glass marbles were unobtainable here.

8.15 p.m.

Sir Harmar Nicholls: The list of Amendments for the Report stage is one of the most disappointing I have seen. It is an unfair list. I do not think the Government have played the game. I listened to the arguments in Committee, and they were long and technical, and the Minister without Portfolio, the Chief Secretary and right hon. Friends of theirs gave every indication—without using the words, I admit—that thought would be given to all questions of this sort and that possibly something would be done on Report. They did not say so in those words, I grant.

Mr. Diamond: I am grateful to the hon. Gentleman for "granting" at once, but I should be glad if he would give us the reference in the OFFICIAL REPORT where any one of my right hon. or hon. Friends said that Amendments would be introduced on Report which have not been introduced.

Sir Harmar Nicholls: I know how pedantic the hon. Gentleman is in the use of words.

Mr. Diamond: Accurate.

Sir Harmar Nicholls: I saw how he gloated when one of my hon. Friends said that a factory might have to close down because my hon. Friend could not produce book and verse to substantiate the statement. Has a factory to be closed down before we can get second thoughts from the Treasury? Has the horse always to go out of the stable before we close the door?
My main point is—I agree that the words are not on the record, and so we


cannot quote them—but the general demeanour and general impression—which is the way things are done in this House; it is not always the words used in Committee stage that indicates to hon. Members what is in the Government's mind—the impression was that some effort would be made by the Government to meet what were clearly the wishes of the Committee, and the wishes not only of this side. From my observations, I certainly gained that impression.
It is customary that in order to get Government business through supporters of the Government remain silent in Committee, but one got an impression from the general atmosphere and the way hon. Gentlemen opposite reacted when the arguments were being put by my hon. Friends that it was one of support. There was no doubt about the demeanour at the Despatch Box, which gave an indication that it was likely that something would be done which the whole House wanted. But in this list of Amendments hardly anything has come from the Government. Clause 4 aroused the emotions and feelings of both sides more than any other Clause in Committee.

The Minister without Portfolio (Sir Eric Fletcher): The hon. Gentleman has made a serious charge. He has indicated to the House that certain assurances were given in Committee that Amendments would be tabled on Report and they have not been tabled. He has been challenged to give an example of any assurance given during the Committee stage which has not been honoured. It is perfectly true that assurances were given that certain things would be considered, and all those assurances have been honoured and everything has been considered. No assurance which was given has not been honoured. I hope the hon. Gentleman will withdraw his allegation.

Sir Harmar Nicholls: If any withdrawing has to be done, it is the right hon. Gentleman who must do it. His hon. Friend gave him the answer while he was speaking just now. I never said that the actual words had been used. What I referred to—and I repeat it with confidence—was the general impression and the use of such phrases as "the matter will be considered". The right hon. Gentleman knows that the word "considered" in the context of the

general committee debate has a meaning beyond that of "considered" as defined in the dictionary.

Mr. Diamond: I would be grateful if an Opposition Front Bench spokesman would get up now and say whether he maintains that the Government have not honoured undertakings which they gave or seemed to give during any part of the Committee stage.

Sir Harmar Nicholls: The Chief Secretary knows the usage of the House very well. All I want to say at this stage is that if, for the rest of the Government's life, they give this sort of impression they will not have such an easy Committee stage in future.

Mr. John Hall: Perhaps I can help my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) by referring to what was said by the Minister of State on 2nd December, for it is the kind of statement which gave the impression to which my hon. Friend refers. The Minister of State had been recalling something said by the Chancellor on 24th November. Then, the Chancellor had said:
I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, C. 1096-7.]
The Minister of State, after quoting those words, said on 2nd December:
This stands as an assurance. I want to make it abundantly clear that my right hon. Friend means by that that, while it may not be possible in advance of more detailed examination of what the repercussions would be in specific cases of making concessions for which there have been claims before this Committee, either now or even on the Report stage, this reconsideration does not mean that of necessity we have to wait until there is a general review of the scheme as a whole. I give this assurance."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 553.]
I understood the Minister of State to be saying, in reply to various Amendments we were pressing at the time, that if, on consideration, the Government thought there was some substance in them, they would be prepared, even on Report, to put down Amendmentts which would give us what we asked for. Because of this feeling, many of the Amendments which were deployed with considerable and forceful argument by my right hon. and hon. Friends were not carried to the logical conclusion of a


Division. We rested on that assurance. I think that is what my hon. Friend the Member for Peterborough has in mind.

Sir Harmar Nicholls: That is precisely an example of what I had in mind. I am only too sorry that I did not equip myself with that sort of argument in detail before I rose.

Mr. Diamond: I am glad that that is what the hon. Member for Peterborough (Sir Harman Nicholls) had precisely in mind, because it is precisely wrong. I will refer to the quoted passage again. The hon. Member for Wycombe (Mr. J. Hall) has misunderstood the words. The House, then in Committee, did not misunderstand them at the time. They are perfectly clear to anyone reading the whole column. My hon. Friend the Minister of State said particularly:
… claims before this committee, either now or even on the Report stage …
My hon. Friend was talking about the claims which the Opposition might advance either in Committee or now on Report stage. Of course, we are glad to hear and are willing to listen to representations. It is our function as the Government to listen to what the House of Commons has to say both in Committee and on the Report stage of a Bill. The matter is not ended at Committee stage. We must listen to representations on Report.
The Minister of State went on to make the point absolutely clear, as he did in the very last sentence:
.. but I want it to be clear that this is not the last word until such time as there will be a general review of the charge as a whole.
My hon. Friend said special circumstances could arise out of argument either in Committee or on Report whereby, after consideration, adjustments might be made prior to the review of the scheme as a whole. That is the situation. I congratulate the hon. Member for Peterborough on his memory and on remembering these few words.

Sir Harmar Nicholls: I never laid claim to that. I laid claim to having formed an impression from what the Minister of State said. My impression was supported by the words quoted by my hon. Friend the Member for Wycombe (Mr. John Hall). The Government should

be under no illusions. They did give that impression. I believe they gave this impression in order to help them over the Committee stage because of the particularly forceful arguments that were being put by my hon. Friends—arguments which brought support from hon. Members opposite, who remained silent but whose general demeanour showed that they supported us.

Mr. John Hall: It is not quite accurate to say that hon. Members opposite remained silent. There was one exception, and he supported arguments put from this side.

Sir Harmar Nicholls: That is perfectly true. But that intervention was very much an exception, and it was made to reinforce a point made by my hon. Friends.
I want to make it clear that the Government gave the impression in Committee of further consideration being given to certain points. Their consideration is reflected in the paucity of Amendments on Report. They have no Amendments at all to Clause 4, which is one of the key Clauses. When the Government have promised to consider, one expects to see that some consideration has been given.
These Amendments concern imports which were exempted by the 1958 Act because of their special quality and for them now to be subject to the obstacle of the surcharge makes nonsense of the efforts of those trying to keep general productivity at the highest level. To put the surcharge on commodities which are not manufactured here and which are imported only when necessary to improve efficiency is against the best interests of the country. We cannot argue on general lines now but I want to put it on record that it is not only disappointing but unfair of the Government, by their demeanour and general attitude, to give the impression that we shall see Amendments on the Report stage and then not produce them.

Sir Knox Cunningham: I want to say a few words about the second and third of the three Amendments under discussion. Both qualifications apply to the man-made fibre industry in Northern Ireland. This industry gets its raw material from abroad since it cannot be manufactured in the United Kingdom. The only


result of the surcharge in this case will be a reduction in the production of manufactured goods and, therefore, a very serious unemployment situation. This is a new industry in Northern Ireland. These new factories were built to assist the employment situation.
I had hoped that the Chancellor himself would be here now—he was here earlier—so that he could hear my plea. He is the person who can make the decision. I very strongly request that, even at this late stage, some concession be made so that the raw material for this industry is exempted and employment in Ulster safeguarded. If a concession were given by the Government I would be happy. Otherwise, I am extremely unhappy about the situation from the point of view of the workpeople in Ulster.

8.30 p.m.

Miss J. M. Quennell: I rise to remind the Government of the situation they will cause for universities and institutions of higher education if the full impact of the surcharge is left on all manufactured goods which are not available in this country. May I remind the Financial Secretary of a Question which I put to him some days ago. I asked him whether he would
issue a direction for the remission of the is per cent. import levy on equipment required by universities, technical colleges and other such organisations working on fixed estimates for the equipment of their laboratories.
We have heard almost ad nauseam for some years that the need of this country is to increase production—

Mr. Eric Lubbock: Before the hon. Lady leaves that point, may I ask whether it is not covered by paragraph 6 of the Second Schedule?

Miss Quennell: I hope to ensure that it will be.
As I say, we have heard for years about the need to increase our productive capacity and the emphasis which has been placed on training, and particularly that type of training which gives the modern scientific approach to industrial training and the automative processes which must come into this country's industry if we are to compete effectively. These techniques require

the most modern and up-to-date installations in laboratories, and this must be emphasised more and more if we are to remodel our industries and enhance our productive capacity.
In his reply the Financial Secretary indicated some sympathy in the matter. He said:
I am aware of the special problems which the temporary import charge creates for universities and other similar institutions and I am considering them."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 161.]
What I am asking him tonight is whether he will consider the convenience of institutions of higher education. It is fair to say that technical colleges are enhancing and increasing the level of their work—

Mr. Charles Loughlin: I can appreciate the need for the hon. Lady to read the speech, but will she read it more slowly, so that we can understand it?

Miss Quennell: The hon. Gentleman should do better than that.
Will the right hon. Gentleman announce his arrangements for these institutions as soon as it is conveniently possible since the difficulties in which they may find themselves in this part of this year will be acute?

Mr. Raymond Gower: As has been said, it is very disappointing that the Government, at this stage of the Bill as in Committee, are showing themselves quite unwilling to budge on these matters. The Chief Secretary seemed to regard it as a sign of great virtue that they were, in his view, equally inflexible at an earlier stage. Inflexibility is one of the matters of which we complain. The hon. Member for Dunbartonshire, East (Mr. Bence) also regarded it as a virtue that these charges would have a blanketing effect on so much of our industry. Again that is something about which we complain.

Mr. Bence: Imports.

Mr. Gower: That is particularly a matter about which we complain.
The ultimate success of our exports is the surest way to solve our trading difficulties. These imposts, in their blanketing form, are designed ultimately to damage our ability to export. That is our criticism. [Interruption.] The hon. Gentleman says that we had protection. I


cannot go into that in detail, because I should be out of order.
We had evidence at an earlier stage of the Bill that these charges are not to be as short term as we would wish. We are disturbed about this because the charges must affect a very large variety of those industries upon which we must rely if we are to succeed in our trade drive. If we are to succeed, we should be, as a nation, like an athlete about to enter a race. [HON. MEMBERS: "Oh."] This is a more competitive world than 13 years ago.

Mr. Loughlin: Six months ago.

Mr. Gower: It is a world which is becoming ever more competitive. Our manufacturing industries need their raw materials at the lowest possible price. Anything designed to prevent them getting them at the lowest possible price is fundamentally bad. As my hon. Friends have said, it is nonsense to extend these charges to raw materials which are not even available in the United Kingdom.
It is no virtue to be inflexible. It would have been a great virtue if the Government had taken extra time and produced a much more varied Bill in which the charges fell on those commodities which we had in this country and did not affect indiscriminately those which are here and those which are not here.

Mr. Diamond: The hon. Member for Barry (Mr. Gower) accused us of being inflexible. This does not tie up very closely with the shocking remarks made by the hon. Member for Peterborough (Sir Harmar Nicholls), who I am sorry is not here. It is normal to stay for the winding-up speeches in a debate in which one has made remarks of the kind which the hon. Gentleman made. I can only say that I regret that he is not with us. I believe that we have given every impression other than that of inflexibility. The hon. Member for Peterborough said that we gave every impression of being about to introduce Amendments which we never said we would introduce. He said that there was nothing in HANSARD to support what he was saying but that we had given a wrong impression of courtesy and willingness to listen to what was said. Are not we supposed to listen? I listen, and all my right hon. and hon. Friends listen.
We want this proposal to work. It needs to work, and we are anxious to hear of any glaring anomaly which is so substantial and so out of keeping with the scheme that we are putting forward that it should be put right immediately. Some Amendments have been tabled, but because they are tabled up pops the right hon. Member for Taunton (Mr. du Cann)—and let me be the first to congratulate him on his distinction of being made a Privy Councillor; nobody deserves the honour more—and says, "Why did you not consider the matter before putting down all these Amendments?" All I can say is that it is very difficult to please everybody.
I want to say to the hon. Member for Peterborough that we went out of our way to be courteous, to listen and to avoid the slightest possibility of misleading anybody into thinking that we would do more than we meant to do. I was present practically throughout the three days of the Committee stage, and certainly right up to half-past four on the Thursday morning, and many times right hon. and hon. Members opposite said, "We do not think that that consideration goes far enough, and we insist on dividing the Committee", and accordingly there were Divisions. Let me put that at rest straight away. The charge that even a slight impression of misleading has been given should be answered straight away, and that is why I am grateful to you, Mr. Deputy-Speaker, for the indulgence which you have shown in enabling me to answer it.
Perhaps I can answer the point raised by the hon. Lady the Member for Peters-field (Miss Quennell) first, because, although other hon. Members have complained about what is not in the Bill, I think that she referred to something which is in the Bill. If she will look at Clause 6(1), she will find everything that she wants there concerning noncommercial undertakings.

Mr. du Cann: Like the hon. Gentleman, I listened with great attention to what my hon. Friend said. I remember the Second Schedule discussion and I rather formed the impression that there were certain categories of case which my hon. Friend mentioned, although she spoke of a wide field, which probably are not covered by the Second Schedule.


Can the Chief Secretary give an unqualified assurance either that every category which my hon. Friend has mentioned is covered or, alternatively, that he will be good enough to look into the matter again, if I may use the phrase a second time, in the cold light of dawn to ensure that that is so?

Mr. Diamond: I do not think that we want to look at matters in the cold light of dawn tonight. Certainly, as I understood the speech of the hon. Lady the Member for Petersfield, I can reply that these matters are already contained within the Bill; I am therefore sympathetic to what I understood her to be saying. If there is anything that the hon. Lady said which I have misunderstood, I must look into it more. As far as I heard the hon. Lady, everything which she requires is already covered, as I have indicated.
As we are discussing a number of Amendments together—and it is of great advantage to be able to do this, because one can relate a number of points which touch upon one another—perhaps I may start with the comments made by the right hon. Member for Taunton in opening the discussion on the first Amendment. I hope that what I say will not be taken as unduly stimulating, but in a tone of voice which indicated that he was trying to make himself as excited as he could be the right hon. Gentleman asked why we had to introduce what he called this wretched Measure. The answer is to deal with wretched situation which we found. [Interruption.] The reason for my saying this is not that it is something of which any Member of the House is unaware, but because, when discussing detailed points, hon. Members tend to forget the general background against which one has to fit the detail.
As every hon. Member knows, we had to deal with a problem of an adverse balance of payments running between an estimated £700 million and £800 million for the current year—an excess of imports over exports; and in addition to dealing with the stimulation of exports, we had to slow down the imports. That is what the Bill is about, the slowing down of imports generally.
I invite the House to be good enough to look at this matter in perspective. I am talking about the slowing down of imports. In 1963, imports amounted to

£4,812 million. In 1964, they were running at the rate of £5,500 million. The charges which we are discussing are estimated and expected to reduce that import bill by an annual rate of about £300 million a year. If that estimate turns out to be completely accurate, the imports for the current year will have been reduced from an annual rate of £5,500 million to £5,200 million, a figure which is still £400 million in excess of the imports of the previous year.
If everything which the Government are saying is proved right, if the whole of the Bill in its present form is accepted and if none of the proposals which right hon. and hon. Members opposite are submitting are accepted, we will still have an import bill £400 million more than last year. To talk about that as if there is a static situation and that people are being denied imports is simply to show that right hon. and hon. Members opposite are no more considering the problem now than they considered it when they were in Government.

Mr. Peter Emery: It is important that we should fully understand the figures that the hon. Gentleman is giving us. He suggests that imports would run at the rate of £5,500 million a year until the end of the year, which, presumably, is 31st March. If that is so, we still have a period of five months to run.

Mr. Arthur Lewis: Three months.

Mr. Emery: I am told that it is foul months; at least, the year has a number of months to run. The Chief Secretary must realise that there was a vast buildup in industry of stocks up to the period of the election. It is criminally wrong to suggest to the country that that rate of growth will continue over the rest of the period.

Mr. Diamond: That was a rather lengthy intervention, but we are only too glad to listen to whatever the hon. Member has to say. I want to make it clear that I was talking about figures at an annual rate, and I said" at an annual rate". When imports are running at an annual rate miles in excess—to be precise, £700 million a year in excess—of the rate at which they were running the previous year, I repeat that it is nonsense to look at the situation as if there was a static, stable level of imports and that if we have any


success in reducing imports we are subjecting all sorts of people and all sorts of businesses to all sorts of intolerable hardhip. That cannot possibly be the case.
8.45 p.m.
The hon. Gentleman's point is answered, in terms of balance of payments, by saying that we were running, as he knows, a deficit between £700 million and £800 million a year. If he wants to take the responsibility of saying that if his party had still been in the Government they would let it go on, he can say that, but I do not believe it. I believe that they would have only let it go on until the General Election was over and not after that. I think that they would have had the courage to do something about it after the General Election, although they lacked the courage to deal with it before.

Mr. Gower: The right hon. Gentleman has given the figures annually. Would he say to what extent he has taken any account of the possibility that these figures were inflated—blown up—because people were horrified at the thought of a Labour Government?

Mr. Diamond: The hon. Gentleman is suggesting that it was such a horrifying thought that it stimulated all businessmen, apparently, into importing goods at a fantastic rate in the belief that business would be fine and that they would sell more than they have ever done before. There is no limit to the arguments to which some hon. Members on the back benches opposite will descend in order to make their case.
Let me be more specific about it. Imports were running at a rate some 15 per cent. higher than in the previous year. But in terms of semi-manufactured and manufactured goods with which we are particularly concerned and which relate to many of the Amendments which were put forward in Committee and today, imports were running at a rate 25 per cent. higher than in 1963, and I invite the House to agree that when we have a situation like that we have to deal with it. The way we have been trying to deal with it is in this Bill. So all the proposals that are now

being considered must be related to that background.
A number of hon. Members opposite have raised individual points affecting constituency matters which, quite frankly—and I have been listening very carefully—I am unable to understand. We want to help. We do not believe that businessmen are of the kind depicted by many hon. Members opposite. We do not believe that a businessman faced with a 15 per cent. import charge closes his factory doors. Let us be frank about it—we do not believe it. We have no official knowledge of any such closure taking place. But as it is such a serious matter to allege that, if the hon. Member would care to come to me afterwards, at any time convenient to him, or write to me and give me details of a case where one of his constituents is closing down his factory and putting all his people out of work, we shall be only too glad to do what we can to prevent that happening. All I can say is that we have had no official knowledge of that happening.

Mr. Wolrige-Gordon: If the right hon. Gentleman is addressing myself—[HON. MEMBERS: "He is addressing the Chair."] If the right hon. Gentleman is addressing the Chair in relation to my speech, I should withdraw, if those were the words that I used. I would withdraw that phrase because it was not what I meant to say, and I am sorry if my feelings on this matter led me to over-state the case in that way. The case that I was concerned about, and which I am still concerned about very deeply, is that the information I have from this factory is that as long as these import surcharges remain it will have to cut down on its expansion programme and therefore there will be a slackening off of employment.

Mr. Diamond: The hon. Member has been courteous enough to withdraw, and when an hon. Member withdraws that is the end of the matter. I merely make the point that this is the second withdrawal we have had so far in this series of debates.
I come now to the hon. Member for Torquay (Sir F. Bennett). I did not follow this one either. He has a constituent who makes a complicated item. He did not define it but said it was a complicated item, and he said he was able to sell this in competition with others


abroad because the price was 6d. per item lower than that of his nearest competitor. The price then was increased by the import charge by 8d.—

Sir F. Bennett: That is right.

Mr. Diamond: —and it therefore became 2d. more than that of the price of the nearest competitor and he lost the whole business, and this particular businessman had no means either of absorbing the 2d. or reducing his profit margin by 2d., or doing anything at all which would deny to the hon. Member for Torquay this argument he could come to use here on Report of the Finance Bill.

Sir F. Bennett: Sir F. Bennett rose—

Mr. Diamond: I have not quite finished. As I say, I do not follow how any business man could find himself in that position. Particularly do I not follow it because of the drawback situation. Under the drawback he would be entitled to recover the whole of the 8d. and he could sell the item as before, at near 6d. less than the price of his nearest competitor.

Sir F. Bennett: The hon. Member is putting a glossy account of this. The figures I gave were after every possible competitive factor had been taken into account. What I was speaking about was the diversion and what would be lost to the export trade because of the pure obstinacy of hon. and right hon. Gentlemen opposite in putting on a surcharge on things solely used for export goods afterwards. If I may make another point—

Mr. Diamond: Mr. Diamond rose—

Sir F. Bennett: No. I have not finished.

Mr. Deputy-Speaker (Sir Samuel Storey): Mr. Deputy-Speaker (Sir Samuel Storey) rose—

Sir F. Bennett: I was still on my feet, Mr. Deputy-Speaker.

Mr. Deputy-Speaker: Order. An intervention in an hon. Member's speech is for the purpose of clarification and not an excuse to make another speech.

Sir F. Bennett: The Chief Secretary is just running away.

Mr. Diamond: When the hon. Gentleman said "if I may make another point"

it seemed to me he had left his intervention and was inviting me to get on with my speech, which I propose to do.

Sir F. Bennett: May I make one final point, please?

Mr. Diamond: I deferred to the hon. Gentleman. I gave him full opportunity to reply.

Sir F. Bennett: No.

Mr. Diamond: If the hon. Gentleman does not think I have given him full opportunity, let him carry on.

Sir F. Bennett: Very shortly, the point is this. If the hon. Gentleman thinks that is such a convincing argument, will he tell me why he has not replied to the letter I sent him over a month ago on this subject?

Mr. Bence: Is that in the Amendment?

Mr. Diamond: I do not know what letter the hon. Gentleman is referring to. He can easily put down a Question if he is not getting replies to his letters. I do not think that affects the argument very much. I have no knowledge of a letter from the hon. Gentleman which has not been answered.

Sir F. Bennett: Perhaps that is because there are too many Ministers.

Mr. Diamond: There may be too many Ministers, but the point we are dealing with is whether or not any seriousness is to be attached to the allegation made by the two hon. Members as to the damage which would result from the Government's legislative proposals. I am sorry, but I cannot understand what the hon. Gentleman the Member for Torquay is referring to, and I cannot believe that there is any serious damage or loss to the export trade deriving from it.
I now come to the reason why it is not possible to accept broadly the Amendments put forward. I have explained that this tax is necessarily one which must be broadly spread. The suggestions made by right hon. and hon. Gentlemen opposite are continually to restrict it so much that it would become a tax on consumer goods only. It is only by spreading it as broadly as it is spread now that a level of 15 per cent. will have the necessary effect. If we reduce the coverage again and again, then either we must increase the rate from 15 per cent.


to a figure which would be intolerable or we shall not achieve the reduction in imports which is vital if we are to get ourselves out of the jam which we have inherited.
Each hon. Member opposite has some constituent whose interests he wants, quite properly, to protect by excluding him from the scope of the Bill. If everyone is excluded from the scope of the Bill we shall find that virtually only consumer goods are included, and these would have to bear a penal rate of charge in order to have any effect in reducing imports. This is the broad argument and I will come to the details.

Mr. Hirst: Mr. Hirst rose—

Mr. Diamond: This is the Report stage, but I shall be happy to give way in a moment.
It is no good picking out a single item and saying, "There are problems about this. This is not available in this country". We must consider that if the duty is to do its work it must apply very broadly indeed.

Mr. Hirst: The hon. Member says that if we make these exceptions we shall need a penal rate of duty to keep exports down. Our argument has been that, broadly speaking, these materials will still be imported in any event and the surcharge will thus have no effect on the balance of payments.

Mr. Diamond: I have said that I was dealing with the matter broadly and that later I should come to the details of the Amendments. I thought it right first to put the broad argument because otherwise hon. Members might not be satisfied of the wisdom and justice of the Government's proposals.
There are, in effect, three categories dealt with in the proposed Amendments —the first dealing with protection; the second dealing generally with raw materials; and the third dealing with goods which are not available elsewhere. These are the three categories of materials which hon. Members opposite wish to have excluded from the Bill. First, I must point out that to exclude all these would result either in a penal rate of duty on what remains or in a stultifying effect on the Bill.
Let me deal specifically with these three cases. On the subject of protection,

I can only repeat what has been said before—and I do not think that I need refer to the actual document: we were anxious to avoid any possible appearance of protection, which would not have been acceptable at all. We were faced with the necessity of reducing imports. Everybody has agreed that the method which we chose was better than that of quantitative restrictions.
The latter would have done what hon. Members opposite say should not be done. They say that we must not penalise the modern and newest industries, but a system of quantitative restrictions would have done that, because it would have been based on the standard of previous years and the new, expanding and modern industries, as hon. Members opposite have called them, would have been limited in terms of quantity in a way similar to that of other firms, instead of being able to go into the open market and, if they were able to pay an extra price, to do so in competition with older industries and to beat them on grounds of efficiency.
It therefore is not possible to consider this proposal in terms of protection. That would be out of the question. Moreover, these very articles which have been withdrawn from the protective duties already have an advantage, and that advantage persists. If 15 per cent. is put on everybody and someone has a basic advantage to begin with, then that advantage will remain, as long as the 15 per cent. is on everybody. The position is, therefore, being made no worse at all.
9.0 p.m.
I can only repeat what has been said from this side time and again; that this is not a basis for excluding these items from the charge. Nor is what was said about raw materials, which to hon. Members opposite mean the raw materials of the particular industries they have in mind.
Glass marbles were referred to as being a raw material. I am sure that the firm with which the hon. Member who spoke about this commodity is concerned regards glass marbles as one of its raw materials, but there is hardly a material which could not be called a raw material. A finished material in one case is often a raw material in the next.
It would have been impossible to define "raw material" in that sense, and if one


excluded from the duty everything that could possibly be called a raw material one would be back at the starting point, with a few goods left which would be subject to the charge while all the others would be excluded; and on the few remaining there would have to be a penal rate of duty, otherwise we could not possibly achieve what we are trying to achieve.

Sir D. Glover: Has the Chief Secretary thought, to cite one example, about the 15 per cent. surcharge being placed on such articles as timber for house building?

Mr. Diamond: That will arise on a later Amendment.

Sir Knox Cunningham: Why did the Government say in their White Paper that basic raw materials would be excluded?

Mr. Diamond: Basic raw materials are, by and large, excluded. The White Paper makes it clear that these were broad definitions and that one could not in any circumstances deal with it other than on a very wide basis indeed, otherwise one would be selective or discriminatory and, as I pointed out, one might reduce it to such negligible proportions that the industries which had to bear the duty would have to bear a fantastic rate of duty. I hope that that is at last beginning to get home.

Mr. Edward Heath: Surely those industries would bear a penal rate of duty only if the object of the Government is to raise revenue. We are told that this is not the object of the Government's policy. The object is to keep items out. If 15 per cent. is placed on the remaining items, surely the duty can remain at 15 per cent. for those remaining items?

Mr. Diamond: This is a simple arithmetical point—[Interruption.] I am surprised that the right hon. Gentleman intervened about it. I agree that the purpose is not to raise revenue. [HON. MEMBERS: "Oh."] Nobody has said that it was. The purpose is to reduce imports. If a certain rate of duty applies over a broad sphere—say, £300 million on imports—then if one reduces the number of goods on which the charge bites one will obviously have to place a higher

rate of duty to keep out £300 million worth in that limited category.

Mr. Heath: This is not true in this case, because the items will come in anyway. This is the whole argument.

Mr. Diamond: The right hon. Gentleman now changes his ground. He now says that the goods will come in anyway and will be chargeable. They are not goods which will come in anyway.

Mr. Heath: They are.

Mr. Diamond: Perhaps the right hon. Gentleman will allow me to explain.
I come to the last Amendment, which is concerned with availability. I have been dealing with the two earlier Amendments. A good example to explain my point is to consider those glass marbles again. That is a commodity which, if I may say so, easily remains in the mind. What was said in regard to the marbles was not that they were not available at all, but that they were not of the kind the hon. Member's constituent wanted—no suitable marbles were available.
That illustrates the difficulty perfectly, because what does "availability" mean? It means that one must have available goods of the particular kind, the particular size, the particular quality and the particular function. All that sort of thing comes into "availability" and it requires no stretch of logic to demonstrate that once an item has been imported one can show that every single imported item was imported because it was not available. One would thereby exclude the whole range of everything that was imported, because no one will import something if it is available here at the same price, in the same quality, with the same delivery date, the same service—the same everything that is required. We will not seek abroad goods that are available here at the same price.
What I am demonstrating is that this definition gets us no further at all, and the hon. Gentleman was quite right in saying that what his constituent wanted was a particular kind of marbles, and that the marbles were not at the moment satisfactory to his constituent.

Mr. Wingfield Digby: I must interrupt the hon. Gentleman here, because this matter was set out in a letter to the Board of Trade three weeks ago, and the Department has not challenged the fact


that glass marbles for this kind of manufacture are not available in this country. That has not been challenged up to this moment.

Mr. Diamond: I do not say that those particular glass marbles can be duplicated anywhere, but what I want to make absolutely clear is that when people say that a particular item is not available, what they mean is an item of that precise nature, that quality, that size, and all the other things that go to determine what is available. And to say "suitable for the purpose" does not help us in the slightest, because although there may be none suitable for the purpose at the moment, a little stimulation to the manufacturer might encourage him to make them suitable. I do not know why these particular goods were not satisfactory—it may be that they were not of the right size—but I should be astonished if a firm

like Pilkingtons would allow itself to be defeated by these marbles.

Therefore, I must repeat that the essence of this duty is to restrict imports—

Sir F. Bennett: For three months.

Mr. Diamond: We can only restrict imports without doing serious damage by spreading the charge over a considerable area, and attempts by right hon. and hon. Members opposite to restrict and restrict would only make the scheme totally unworkable. We are compelled to introduce a scheme like this, to limit imports, in order to help with the shocking balance-of-payments problem that we inherited. I therefore invite the House to reject the Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 201, Noes 219.

Division No. 28.]
AYES
[9.10 p.m.


Agnew, Commander Sir Peter
Curran, Charles
Hornby, Richard


Alison, Michael (Barkston Ash)
Currie, G. B. H.
Hornsby-Smith, Rt. Hn. Dame P.


Allan, Robert (Paddington, S.)
Dalkeith, Earl of
Howe, Geoffrey (Bebington)


Allason, James (Hemel Hempstead)
Dance, James
Hunt, John (Bromley)


Astor, John
Davies, Dr. Wyndham (Perry Barr)
Hutchison, Michael Clark


Atkins, Humphrey
d' Avigdor-Goldsmid, Sir Henry
Irvine, Bryant Godman (Rye)


Awdry, Daniel
Dean, Paul
Johnston, Russell (Inverness)


Baker, W. H. K.
Digby, Simon Wingfield
Jones, Rt. Hn. Aubrey (Hall Green)


Balniel, Lord
Drayson, G. B.
Jopling, Michael


Barlow, Sir John
du Cann, Rt. Hn. Edward
Joseph, Rt. Hn. Sir Keith


Batsford, Brian
Eden, Sir John
Kaberry, Sir Donald


Beamish, Col. Sir Tufton
Emery, Peter
Kerby, Capt. Henry


Bell, Ronald
Errington, Sir Eric
Kerr, Sir Hamilton (Cambridge)


Bennett, Sir Frederic (Torquay)
Fell, Anthony
Kershaw, Anthony


Bennett Dr. Reginald (Gos &amp; Fhm)
Fletcher-Cooke, Sir John (S'pton)
Kilfedder, James A.


Berkeley, Humphry
Forrest, George
Kimball, Marcus


Berry, Hn. Anthony
Foster, Sir John
King, Evelyn (Dorset, S.)


Bessell, Peter
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Lancaster, Col. C. G.


Biffen, John
Fraser, Ian (Plymouth, Sutton)
Legge-Bourke, Sir Harry


Biggs-Davison, John
Gammans, Lady
Litchfield, Capt. John


Bingham, R. M.
Giles, Rear-Admiral Morgan
Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)


Birch, Rt. Hn. Nigel
Gilmour, Sir John (East Fife)
Lloyd, Ian (P'tsm'th, Langstone)


Black, Sir Cyril
Glover, Sir Douglas
Longden, Gilbert


Box, Donald
Goodhew, Victor
Loveys, Walter H.


Boyd-Carpenter, Rt. Hn. J.
Gower, Raymond
Lubbock, Eric


Boyle, Rt. Hon. Sir Edward
Gresham-Cooke, R.
Lucas, Sir Jocelyn


Brinton, Sir Tatton
Grieve, Percy
Lucas-Tooth, Sir Hugh


Bromley-Davenport,Lt.-Col.Sir Walter
Griffiths, Peter (Smethwick)
McAdden, Sir Stephen


Brooke, Rt. Hn. Henry
Grimond, Rt. Hn. J.
Mackenzie, Alasdair(Ross &amp; Crom'ty)


Bruce-Gardyne, J.
Gurden, Harold
Mackie, George Y. (C'ness &amp; S'land)


Bullus, Wing Commander Sir Eric
Hall, John (Wycombe)
Macleod, Rt. Hn. Iain


Butcher, Sir Herbert
Hall-Davis, A. G. F.
McMaster, Stanley


Campbell, Gordon
Hamilton, Marquess of (Fermanagh)
McNair-Wilson, Patrick


Channon, H. P. G.
Harris, Frederic (Croydon, N.W.)
Maginnis, John E.


Chichester-Clark, R.
Harris, Reader (Heston)
Mathew, Robert


Clark, William (Nottingham, S.)
Harrison, Brian (Maldon)
Maude, Angus E. U.


Clarke, Brig. Terence (Portsmth, W.)
Harvey, John (Walthamstow, E.)
Maudling, Rt. Hn. Reginald


Cole, Norman
Hawkins, Paul
Mawby, Ray


Cooke, Robert
Heald, Rt. Hn. Sir Lionel
Maxwell-Hyslop, R. J.


Cooper-Key, Sir Neill
Heath, Rt. Hn. Edward
Maydon, Lt.-Cmdr. S. L. C.


Corfield, F. V.
Higgins, Terence L.
Meyer, Sir Anthony


Costain, A. P.
Hiley, Joseph
Mills, Peter (Torrington)


Craddock, Sir Beresford (Spelthorne)
Hill, J. E. B. (S. Norfolk)
Mills, Stratton (Belfast, N.)


Crawley, Aidan
Hirst, Geoffrey
Mitchell, David


Crosthwaite-Eyre, Col. Sir Oliver
Hobson, Rt. Hn. Sir John
More, Jasper


Cunningham, Sir Knox
Hogg, Rt. Hn. Quintin
Morrison, Charles (Devizes)




Mott-Radcliffe, Sir Charles
Rees-Davies, W. H.
Thorpe, Jeremy


Murton, Oscar
Ridley, Hn. Nicholas
Tilney, John (Wavertree)


Nicholls, Sir Harmar
Ridsdale, Julian
Vaughan-Morgan, Rt. Hn. Sir John


Nicholson, Sir Godfrey
Robson Brown, Sir William
Vickers, Dame Joan


Noble, Rt. Hn. Michael
Rodgers, Sir John (Sevenoaks)
Walder, David (High Peak)


Onslow, Cranley
Roots, William
Walker, Peter (Worcester)


Orr, Capt. L. P. S.
Royle, Anthony
Walker-Smith, Rt. Hn. Sir Derek


Osborn, John (Hallam)
Russell, Sir Ronald
Wall, Patrick


Osborne, Sir Cyril (Louth)
Scott-Hopkins, James
Walters, Dennls


Page, R. Graham (Crosby)
Sharples, Richard
Ward, Dame Irene


Pearson, Sir Frank (Clitheroe)
Shepherd, William
Weatherill, Bernard


Peel, John
Sinclair, Sir George
Webster, David


Percival, Ian
Smith, Dudley (Br'ntf'd &amp; Chiswick)
Whitelaw, William


Pike, Miss Mervyn
Spearman, Sir Alexander
Wilson, Geoffrey (Truro)


Pitt, Dame Edith
Stainton, Keith
Wise, A. R.


Pounder, Rafton
Stanley, Hn. Richard
Wolrige-Gordon, Patrick


Powell, Rt. Hn. J. Enoch
Summers, Sir Spencer
Woodhouse, Hn. Christopher


Price, David (Eastleigh)
Taylor, Edward M. (G'gow,Cathcart)
Woodnutt, Mark


Prior, J. M. L.
Taylor, Frank (Moss Side)
Younger, Hn. George


Quennell, Miss J. M.
Thatcher, Mrs. Margaret



Ramsden, Rt. Hn. James
Thomas, Rt. Hn. Peter (Conway)
TELLERS FOR THE AYES:


Rawlinson, Rt. Hn. Sir Peter
Thompson, Sir Richard (Croydon,S.)
Mr. MacArthur and




Mr. R. W. Elliott.




NOES


Abse, Leo
Foot, Sir Dingle (Ipswich)
MacDermot, Niall


Allaun, Frank (Salford, E.)
Foot, Michael (Ebbw Vale)
McGuire, Michael


Armstrong, Ernest
Fraser, Rt. Hn. Tom (Hamilton)
Mclnnes, James


Atkinson, Norman
Freeson, Reginald
MacKenzie, Gregor (Rutherglen)


Bagier, Gordon A. T.
Galpern, Sir Myer
MacPherson, Malcolm


Barnett, Joel
Garrow, A.
Mahon, Peter (Preston, S.)


Baxter, William
George, Lady Megan Lloyd
Mahon, Simon (Bootle)


Bence, Cyril
Ginsburg, David
Mallalieu, E. L. (Brigg)


Bennett, J. (Glasgow, Bridgeton)
Gourlay, Harry
Mallalieu, J.P.W. (Huddersfield,E.)


Binns, John
Gregory, Arnold
Manuel, Archie


Blackburn, F.
Grey, Charles
Mapp, Charles


Blenkinsop, Arthur
Griffiths, David (Rother Valley)
Marsh, Richard


Boardman, H.
Griffiths, Rt. Hn. James (Llanelly)
Mason, Roy


Bowden, Rt. Hn. H. W. (Leics S.W.)
Hale, Leslie
Maxwell, Robert


Boyden, James
Hamilton, James (Bothwell)
Mendelson, J. J.


Braddock, Mrs. E. M.
Hamling, William (Woolwich, W.)
Mikardo, Ian


Bradley, Tom
Hannan, William
Millan, Bruce


Bray, Dr. Jeremy
Harper, Joseph
Miller, Dr. M. S.


Broughton, Dr. A. D. D.
Harrison, Walter (Wakefield)
Milne, Edward (Blyth)


Brown, Hugh D. (Glasgow, Provan)
Hart, Mrs. Judith
Molloy, William


Brown, R. w. (Shoreditch &amp; Fbury)
Hayman, F. H.
Monslow, Walter


Buchan, Norman (Renfrewshire, W.)
Hazell, Bert
Morris, Alfred (Wythenshawe)


Buchanan, Richard
Herbison, Rt. Hn. Margaret
Morris, John (Aberavon)


Butler, Herbert (Hackney, C.)
Hobden, Dennis (Brighton, K'town)
Murray, Albert


Butler, Mrs. Joyce (Wood Green)
Holman, Percy
Neal, Harold


Callaghan, Rt. Hon. James
Horner, John
Noel-Baker, Rt.-Hn. Philip(Derby,S.)


Carmichael, Neil
Houghton, Rt. Hn. Douglas
Norwood, Christopher


Carter-Jones, Lewis
Howarth, Harry (W ellingborough)
Oakes, Gordon


Castle, Rt. Hn. Barbara
Howarth, Robert L. (Bolton, E.)
Ogden, Eric


Coleman, Donald
Howell, Denis (Small Heath)
O'Malley, Brian


Conlan, Bernard
Howie, W.
Oram, Albert E. (E. Ham S.)


Corbet, Mrs. Freda
Hoy, James
Orbach, Maurice


Craddock, George (Bradford, S.)
Hughes, Emrys (S. Ayrshire)
Orme, Stanley


Cullen, Mrs. Alice
Hughes, Hector (Aberdeen, N.)
Oswald, Thomas


Dalyell, Tam
Hunter, Adam (Dunfermline)
Owen, Will


Darling, George
Hunter, A. E. (Feltham)
Page, Derek (King's Lynn)


Davies, G. Elfed (Rhondda, E.)
Irving, Sydney (Dartford)
Pannell, Rt. Hn. Charles


Davies, Harold (Leek)
Jackson, Colin
Pargiter, G. A.


Davies, S. O. (Merthyr)
Janner, Sir Barnett
Park, Trevor (Derbyshire, S.E.)


Delargy, Hugh
Jeger, George (Goole)
Pavitt, Laurence


Dell, Edmund
Jeger,Mrs.Lena(H'b'n&amp;St.P'cras.S.)
Pentland, Norman


Diamond, John
Jenkins, Hugh (Putney)
Popplewell, Ernest


Dodds, Norman
Jenkins, Rt. Hn. Roy (Stechford)
Price, J. T. (Westhoughton)


Donnelly, Desmond
Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)
Probert, Arthur


Driberg, Tom
Jones, J. Idwal (Wrexham)
Pursey, Cmdr. Harry


Duffy, Dr. A. E. P.
Jones, T. W. (Merioneth)
Rankin, John


Edelman, Maurice
Kelley, Richard
Redhead, Edward


Edwards, Rt. Hn. Ness (Caerphilly)
Kenyon, Clifford
Rees, Merlyn


Edwards, Robert (Bilston)
Kerr, Dr. David (W'worth, Central)
Rhodes, Geoffrey


Ennals, David
Lawson, George
Richard, Ivor


Ensor, David
Leadbitter, Ted
Roberts, Albert (Normanton)


Evans Albert (Islington, S.W.)
Lever, L. M. (Ardwick)
Roberts, Goronwy (Caernarvon)


Evans, Ioan (Birmingham, Yardley)
Lewis, Arthur (West Ham, N.)
Robertson, John (Paisley)


Finch, Harold (Bedwellty)
Lewis, Ron (Carlisle)
Robinson, Rt.Hn. K. (St.Pancras,N.)


Fitch, Alan (Wigan)
Lomas, Kenneth
Rodgers, William (Stockton)


Fletcher, Sir Eric (Islington, E.)
Loughlin, Charles
Rogers, George (Kensington, N.)


Fletcher, Ted (Darlington)
Mabon, Dr. J. Dickson
Ross, Rt. Hn. William


Fletcher, Raymond (Ilkeston)
McBride, Neil
Rowland, Christopher


Floud, Bernard
MacColl, James
Sheldon, Robert







Shore, Peter (Stepney)
Stewart, Rt. Hn. Michael
Warbey, William


Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)
Stones, William
Watkins, Tudor


Short, Mrs. Renée (W'hampton,N.E.)
Stross,Sir Barnett(Stoke-on-Trent,C.)
Weitzman, David


Silkin, John (Deptford)
Swain, Thomas
Wells, William (Walsall, N.)


Silkin, S. C. (Camberwell, Dulwich)
Symonds, J. B.
Whitlock, William


Silverman, Julius (Aston)
Taverne, Dick
Wilkins, W. A.


Silverman, Sydney (Nelson)
Thomas, George (Cardiff, W.)
Williams, Alan (Swansea, W.)


Slater, Mrs. Harriet (Stoke, N.)
Thornton, Ernest
Wilson, William (Coventry, S.)


Slater, Joseph (Sedgefield)
Tinn, James
Winterbottom, R. E.


Small, William
Tomney, Frank
Woof, Robert


Snow, Julian
Urwin, T. w.
Wyatt, Woodrow


Solomons, Henry
Varley, Eric G.
Yates, Victor (Ladywood)


Soskice, Rt. Hn. Sir Frank
Wainwright, Edwin



Spriggs, Leslie
Walker, Harold (Doncaster)
TELLERS POR THE NOES:


Steele, Thomas
Wallace, George
Mr. Ifor Davies and Mr. McCann.

Lord Balniel: I beg to move Amendment No. 5, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not charged on goods imported into the United Kingdom and used in the manufacture of pharmaceuticals (as comprised in Chapter 30).
In Committee last week my right hon. and hon. Friends and I moved some Amendments to try to exempt from the surcharge the raw and semi-processed materials, technically known as intermediates, used by the pharmaceutical industry in the production of drugs. In the absence of the Chancellor of the Exchequer and the President of the Board of Trade, who were abroad explaining their policies, the junior Ministers rejected those Amendments. I regret the Chancellor of the Exchequer is not attending this particular debate, because it was clear from the junior Ministers' answers that the briefs were marked "Reject" and that they did not feel at liberty to exercise any discretion.
In the Amendment we return to the subject and deal with drugs and medicaments covered by Chapter 30 of the tariff list. We are discussing drugs and medicaments of inestimable value to the community. These are drugs of great value in eradicating disease and alleviating suffering. These are drugs which help the mentally and physically sick. These are drugs which are used in hospitals and in the home of every family when sickness strikes.
During the past few years there have been a number of inquiries into the cost of drugs. The Guillebaud Committee inquired into the cost of the Health Service. The Hinchliffe Committee inquired into the cost of prescribing. In 1962 and 1963 the Public Accounts Committee inquired into the price structure of the pharmaceutical industry. So far, we have not had to have an inquiry into

a deliberate act by the Government artificially to increase the cost of drugs in this country. This debate is on that precise issue—an act of the Government which will artificially increase the cost of drugs used in the National Health Service or paid for by private patients when they are sick and medicines are prescribed for them by their doctors.
I do not think that there is any doubt on either side of the House that the surcharge will increase the cost of manufacturing drugs and medicaments. I accept that it will not be an immediate increase. The price of certain drugs will be immediately increased. I am thinking of those drugs brought into this country free of import duty which are used for clinical trials by British doctors. In general terms, however, I accept that there will not be an immediate increase in price. I have consulted two of the great pharmaceutical companies which lie within my constituency—Roche Products Ltd. and Smith Kline and French Laboratories Ltd. I understand that they, in common with other pharmaceutical companies, are doing their utmost to absorb the surcharge within their costs. Also, there will not be an immediate increase in the price of the drugs, because the price of drugs prescribed under the Health Service is fixed by the Voluntary Price Regulation Scheme.
Is the Voluntary Price Regulation Scheme to be renegotiated, because the prices at which the drugs were fixed were based on data which are no longer relevant? The drug prices were based on manufacturing costs which did not take the surcharge into account. It is reasonable, before we leave the Amendment, to 'inquire whether the voluntary price regulation will be renegotiated in the light of the surcharge.
There is no doubt that this will work through the Health Service and will increase the cost of that Service. We know


that in any case during the coming year it will be substantially increased as a result of the decision of hon. Members opposite to abolish the prescription charge. At a modest estimate that will cost about £20 million. There will now be a further increase following the imposition of the 15 per cent. surcharge. I think that the House will realise that the net effect on the Health Service will be more than 15 per cent. Indeed, for every £1 which the Government will collect as a result of the surcharge, the additional cost in the Health Service will be £1 6s. 9d. The reason for this is the structure of pharmacists' pay, the wholesalers' discount and the chemists' on-costs.
I should like the Government to answer the crucial question which can be answered "Yes" or "No". Is the purpose of this surcharge on the raw materials and the partly processed materials used for the manufacture of drugs designed to reduce the amount of imports into this country? I understand that the general purpose of the surcharge is to reduce the amount of imports into this country. Does that argument apply to the drug industry? Does it apply to the raw materials and to the intermediates used in the manufacture of drugs?
The Minister of State, Board of Trade, on 2nd December, winding up the debate, said:
I am sure that when we consider any modification of the surcharge it is in this area that we are bound to feel the greatest degree of sympathy.
I am bound to tell him that, whilst he spoke in his usual considerate and courteous way, we are not seeking sympathy; nor is the pharmaceutical industry. What we are asking is that action shall be taken in the interests of the Health Service, in the interests of those who are sick and who have to pay higher charges as a result of the surcharge, and in the interests of the pharmaceutical industry which is one of the great exporting industries of this country.
The hon. Gentleman continued:
I cannot promise that this will be reflected on Report, but I undertake to draw to the Chancellor's attention the contentions and feelings expressed by hon. Members and to make known to him the feelings of the Committee." —[OFFICIAL REPORT, 2nd December. 1964: Vol. 703, c. 630.]

We are very fortunate in that the Chancellor has now returned to the Chamber and I should like to know what action he is taking as a result of the information which was passed to him by the Minister of State, Board of Trade. He took a political decision, so far as one could gather, without any consultation with the industries concerned. The Minister of State, Board of Trade undertook to call the arguments to his attention. I hope that we shall be given some information about the result of the representations which must have been made by the Board of Trade to the Chancellor of the Exchequer.
I should like to refer to the effect of the surcharge on individual companies, so that hon. Members opposite can measure the scale of the charge which they are imposing on the drug industry and the effect that it will have on various drugs which are prescribed—life-saving drugs, drugs to alleviate suffering and to eradicate disease. Before I do so, I should like to quote from the Hinchliffe Report. Paragraph 83 is directly relevant to the Amendment which we are now discussing, and it reads as follows:
The National Health Service was introduced at a time when rapid advances in pharmacology led to the discovery and development of many expensive new drugs. The large-scale production of penicillin during the war opened the way to the discovery and marketing of a large and ever-growing range of antibiotics. The range of synthetic drugs has widened and the use of cortisone and other corticosteroids is increasing. These new preparations are all extremely complex substances"—
and this is the reason why so many of the pharmaceutical companies will find it impossible to reclaim on the surcharge—
and the costs of research and of the intricate plant and equipment involved in their production are inevitably very high.
Many of the new preparations are of inestimable value and have added considerably to the general practitioner's armamentarium. Diseases which were formerly unresponsive to other forms of treatment have been brought under effective control by their use in patients' homes, saving innumerable hospital beds. Tuberculosis and pneumonia are examples that readily come to mind. The same applies to many cases of severe asthma, while patients with chronic bronchitis can be kept in better health and more able to continue or resume work. It adds to the drug bill, but treatment in hospital is many times more expensive.


Hon. Members opposite may like to know that every single one of these drugs is having a surcharge of 15 per cent. imposed upon the raw materials used in its manufacture. They may like to know that in the case of the diseases referred to in the Report, a 15 per cent. surcharge is being imposed on the materials which have to be imported if the drugs are to be made to attack it.

9.30 p.m.

Mr. Ernest Popplewell: I am sure that the whole House appreciates the point which the noble Lord is making. We appreciate that, according to him, the 15 per cent. surcharge will increase the price of the drugs. In fairness to the House and to the nation, will the noble Lord, when he talks about a 15 per cent. increase in the cost of the drugs, also tell us what are the profits of the pharmaceutical firms, in particular the two which he mentioned as being in his constituency, so that we may form a correct assessment of the situation? Will he provide the profit and loss accounts so that we can judge how much trust we can put in this story of the effect of the 15 per cent. surcharge?

Lord Balniel: The hon. Member was not present to hear the opening part of my speech, in which I said that the pharmaceutical companies in my constituency are absorbing the cost. The hon. Gentleman clearly does not know that the prices of drugs prescribed in the National Health Service are agreed by the Minister of Health, whose absence from this and previous debates I find slightly distressing. These prices are agreed by the Ministry with the pharmaceutical companies concerned.
I want to show hon. Members the effect on the cost of manufacturing these drugs. The Hinchliffe Report referred to the corticosteroids, the raw materials of which have to be imported. I do not believe that the hon. Gentleman is suggesting that they should not be imported. The annual import value of the raw materials and partly processed materials of one firm which makes these corticosteroids is £300,000, and the firm would have to pay a surcharge of £45,000 on it. There are six firms working on new antibiotics. The annual import value of

the raw materials and intermediates which they need—and they are not produced in this country—for these new antibiotics amounts to £665,000, and the Chancellor of the Exchequer is imposing a surcharge of £99,000. There is a firm which makes a drug for diabetes. Its annual import value of raw materials is £300,000 and the surcharge will be £45,000.
The most dramatic advance in medicine in recent years has been the way in which tuberculosis, which used to be one of the killer diseases in this country, has been reduced to an illness still of severity, undoubtedly, but one which no longer presents a major national problem. There are two firms whose annual import value for raw materials and partly processed substances for use in the manufacture of drugs for the treatment of tuberculosis amounts to £200,000, and the Chancellor is imposing a surcharge of £30,000 on that.

Mr. Loughlin: The noble Lord has spoken about two firms in his constituency which are absorbing the cost of the surcharge.

Lord Balniel: Temporarily.

Mr. Loughlin: This is as I understand his statement; he can correct me later if I am wrong. The noble Lord went on to say that there was an existing agreement as regards the Health Service which meant that there would be no increase to the Service in the cost of drugs consequent upon the 15 per cent. surcharge. If this is the point which he was making, does it not defeat the whole of his case that the surcharge would mean an additional cost to the Health Service?

Lord Balniel: The company I referred to is temporarily able to absorb the cost. It is quite possible, for all I know, that it is now having to sell the drugs at a loss. It is quite probable that it is selling with its profit margin completely eliminated. Plainly, additional costs at that rate cannot be absorbed for any prolonged period.

Mr. Albert Evans: Mr. Albert Evans (Islington, South-West)rose

Lord Balniel: The hon. Gentleman must make his own speech.
The general argument for the surcharge which has been advanced time and again by the Treasury Bench is that its purpose is to reduce imports. Will the Chancellor answer "Yes" or "No" to this question: is it his desire to reduce the imports of the pharmaceutical industry? The right hon. Gentleman has now been able to attend the debate. I ask him to give the most urgent consideration to the Amendment, which affects the Health Service, which affects private patients when they are sick and have to purchase medicines, and which affects the well-being of the pharmaceutical industry.
On this Amendment I cannot advance the argument of exports, but I may mention that this is one of our great exporting industries. It exports £54 million worth a year. I suspect that the surcharge, far from facilitating its task of exporting in a highly competitive market, will make it even more difficult.

Mr. Loughlin: I shall devote my remarks to the single point which I raised with the noble Lord the Member for Hertford (Lord Balniel). I accept that the pharmaceutical industry is a great industry, and I acknowledge all the praise which we give to it, but certain facts remain unaltered. The pharmaceutical industry, generally speaking, could absorb the whole of the additional 15 per cent. surcharge without batting an eyelid. There have been some scandalous charges made and enormous advantage of the National Health Service has been taken by the pharmaceutical industry.
The hon. Member for Hertford began by pleading that the surcharge involved additional costs for the National Health Service and castigated the Government about what was an apparent contradiction in that the Government were imposing the surcharge on the National Health Service and the Government themselves would have to pay the bill. That point was made in the debate in Committee. Today, after arguing the same case, the hon. Member said that two firms in his constituency were prepared to absorb the 15 per cent. Therefore, so far as they are concerned there will be no additional cost to the Health Service.

Sir Harmar Nicholls: Is the hon. Gentleman giving an answer on behalf of the Chancellor of the Exchequer and saying

that the 15 per cent. is imposed on the pharmaceutical industry because it has made too large profits?

Mr. Loughlin: I am not saying anything of the sort. It is no good the right hon. Member for Bexley (Mr. Heath) constantly nodding. The implications of what I say may well be as his hon. Friend has inferred. Is there something wrong with the right hon. Gentleman's neck?

Mr. Heath: If the hon. Gentleman is to pursue the argument, he must accept that the goods will not be kept out. This is merely an impost on the pharmaceutical industry in order to get more tax from it.

Mr. Loughlin: The right hon. Gentleman mistakes my argument. I am merely pointing out the contradictions in the statement made by the hon. Member for Hertford, who apparently did not wish to make any correction when I made an intervention. He cannot argue that the 15 per cent. imposes an additional burden on the National Health Service if in the instance from his own constituency he admits that the firms are not only able but willing to absorb the surcharge. In addition, he argues that because of a prior agreement—he asks whether it will be renegotiated—no additional burden can be imposed on the Health Service. [Interruption.] The hon. Member for Ormskirk (Sir D. Glover) constantly bawls things out, but I do not know what he said. I am quoting the words of his hon. Friend.

Sir D. Glover: If the hon. Gentleman is saying that his Government are the sort of Government who would negotiate an agreement on certain prices and then put a 15 per cent. surcharge on the prices and expect the agreement to stand, we know what sort of Government we have.

Mr. Loughlin: I remember the times that we had to protest about the things that the previous Government did. An agreement was negotiated for nurses, which came within the National Health Service, but right hon. Gentlemen opposite repudiated it. I could give other instances, but I should be ruled out of order.
If the hon. Member for Hertford argues this type of case, he cannot at the same time argue the case that the Government are imposing an additional burden on the National Health Service. If the


drug firms increase the cost of drugs, the Government will be responsible for the increased cost of the National Health Service. If the industry absorbs the extra cost—and the hon. Member for Hertford says that it will—and if an increase in cost is prohibited under any other arrangement, then the case he presented falls to the ground.

9.45 p.m.

Mr. Gower: My hon. Friend the Member for Hertford (Lord Balniel), both in Committee and tonight, has put forward clearly and fairly a very strong case. Whatever hon. Members opposite may say, one point he made is unanswerable. It is that if this charge is sustained beyond a very short period then the ultimate effect must be to add to the overall cost of the National Health Service. I cannot see how anyone could gainsay that. That must be the effect unless the surcharge is to be maintained for a lesser period than we have been led to expect.
As we see when we look at this Finance Bill certain items have been exempted, mostly food. There is surely as strong a case for taking a similar view of materials which go into the preparation and manufacture of valuable drugs. Food was exempted because the surcharge would have affected so closely the personal spending of all our citizens. Had there not been a fully comprehensive Health Service the Government would not have dared to impose the surcharge on the pharmaceutical industry. They would never had thought of imposing it on merit.
The only reason the Government have risked putting the surcharge on pharmaceutical imports is that they feel that the full effect will be cushioned from people by the existence of the Health Service. But that is not dealing with the matter as one of principle. They simply feel that there is a special reason why they can do it without apparent ill effects in this case.
My hon. Friend also stressed the effect on our export trade. As in the case of other commodities we have discussed, the very measures the Government are taking to restrict some of these exports may hamper or defeat them in their long-term job, which is to maintain and increase exports of this manufacturing country. I have no doubt that hon. Members on

this side will support the Amendment moved so persuasively by my hon. Friend.

Mr. Stanley Orme: The hon. Member for Hertford (Lord Balniel) gave us harrowing examples of suffering and the manner in which drugs are used. My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) has pointed out how the pharmaceutical industry can absorb most of the extra cost through the profits made in recent years. But if there is an increased cost on the National Health Service the attitude of hon. Members on this side of the House is that the nation as a whole and not the sick alone should bear it.
If, for some reason, the party opposite had introduced import restrictions during their previous "stop-go" policy, their answer would have been to increase prescription charges. Our answer is to remove these charges in difficult times and let the nation and not the sick bear the cost.

Mr. Heath: Will the hon. Member say when, in our so-called "stop-go" policy, we imposed import restrictions?

Mr. Orme: The right hon. Gentleman knows very well what I am referring to—all the previous increases in Bank Rate and the other charges which were imposed by him and his right hon. Friends.
The moral which the nation should draw from this is that in a time of serious financial difficulty the Labour Government are removing prescription charges and allowing the cost to fall on the whole nation, particularly those who can afford it.

Sir Alexander Spearman: Is the hon. Gentleman defending this surcharge on the ground that it is a good revenue producer, or on the ground that it will prevent imports?

Mr. Orme: I am not defending this as a good revenue producer because, as those on the Government Front Bench stated, this is a temporary measure which will be removed at the earliest possible opportunity. The pharmaceutical industry should take this into account. It is well able to absorb the surcharge. We will let it fall, not on the sick and needy, but on the nation as a whole.

Miss Quennell: Before the hon. Gentleman sits down, could he clarify


one point which I find hard to follow? He said that the nation as a whole should bear this and not the sick. But this levy is an impost on the sick and not on the nation as a whole.

Mr. Speaker: I think that the hon. Gentleman has sat down.

Mr. Fell: What I find so incredible is the misunderstanding of hon. Members opposite about the whole basis of the surcharge. I might be wrong, and I should be delighted if the Chancellor of the Exchequer would put me right, but I understood that the surcharge was introduced in order to cut imports. It is simply that. Therefore, it is not a question of whether the price of drugs will go up and who will pay for them. In so far as the surcharge is successful, it will stop drugs coming into this country. It is as simple as that. If the drugs made with imported materials are essential to the sick, this is a tax on sickness.

The Financial Secretary to the Treasury (Mr. Niall MacDermot): We have had a rather shorter debate on this Amendment than we had on the similar Amendment in Committee. No doubt that is because hon. Members do not wish to deploy at the same length the arguments which were fully canvassed in that debate.
It is perfectly understandable, however, that hon. Members should have raised this matter again. My hon. Friend the Minister of State, Board of Trade assured hon. Members that he had listened with great sympathy to the arguments which had been adduced and that he would report them to the Chancellor of the Exchequer. While making it quite clear that he could not promise that that would be reflected on Report—[Interruption.] The hon. Member for Peterborough (Sir Harmar Nicholls) did not have the courtesy to wait to the end of the last debate to listen to the answer to the speech which he made.

Sir Harmar Nicholls: The convention is that somebody who has spoken should listen to the speech which follows. I did that. The speech of the Chief Secretary was, I understand, two speeches away. I only saw that on the annunciator, otherwise I would have been here.

Mr. MacDermot: The convention is that one waits until the person one has attacked has replied. The hon. Gentleman

attacked all the members of the Government Front Bench. The hon. Member did not have the courtesy to wait for my hon. Friend the Chief Secretary to answer his attack. Perhaps, therefore, he will contain himself at this stage. My hon. Friend the Minister of State, Board of Trade said:
I am sure that when we consider any modification of the surcharge it is in this area that we are bound to feel the greatest degree of sympathy."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703. c. 630.]
These Amendments, particularly when persuasively argued, as we have heard, evoke sympathy. We have examined them closely and I will answer some of the questions which have been put to us. First, we were asked whether it is the intention of the Government through the surcharge to reduce the volume of imports of drugs. Let me answer that directly. It is not our intention to reduce the volume of imports of drugs. I qualify that at once, however, by saying that it is necessary to apply the brake throughout the field of our imports. What has been happening is that our imports have been rising, in this field as in others. It must be understood by hon. Members that it is the whole purpose of this Measure to apply a brake over the field of our imports generally. We do not wish to see, and I am sure that hon. Members opposite do not wish to see, the import bill for drugs running away, out of control, without any relation to the economic situation and to our balance of payments.
I have said, and I do not wish to withdraw from it in any way, that it is not our object to try to reduce the import bill in relation to drugs. Let me also say that if it had been possible for us to extract from the field of imports those materials and chemicals which are used for the pharmaceutical industry, we would have been happy to do so.
The hon. Member for Barry (Mr. Gower) asked why we cannot treat drugs in the same way as we have treated food and why we cannot regard this as a category which should be exempted. I assure hon. Members that if it was as simple as that, there would be an Amendment on the Order Paper tonight in the name of my right hon. Friend the Chancellor of the Exchequer. I have been into this matter in great detail, and with great care, with my hon. Friends since the


debate in Committee. For reasons which I hope to explain, at not too great length, I assure hon. Members that it would not be possible to exclude drugs which are used for the pharmaceutical industry without, at the same time, excluding similar materials which are used, and in many cases to a much greater extent, in other industries. If those chemicals were exempted for a whole range of other industries, it would confer a quite unwarranted benefit for those industries in comparison with other similar industries which happen to be using slightly different chemicals.

Lord Balniel: In the Amendment, we are dealing with Chapter 30. May I ask whether the hon. and learned Gentleman's argument applies to Chapter 29? My information is that the substances listed in Chapter 29 are used overwhelmingly by the pharmaceutical industry and not in other industries.

Mr. MacDermot: It does apply to it, and I will give examples presently.
Before I explain in detail what I have just advanced in argument, I remind the House that there is no need for this charge to have any adverse effect upon any patient. The National Health Service is open to anyone who chooses to use it and it caters for anyone who is in serious need of medication. I appreciate that that does not necessarily relieve the private patients who prefer not to use the National Health Service. The National Health Service is, of course, available to every patient, and it is not going to mean any obstruction in any way of the treatment of any patient. It does not follow, as my hon. Friends who have intervened in this debate have stated, that the effect of the charge is going to mean some enormous increase in the National Health Service bill.
10.0 p.m.
The noble Lord the Member for Hertford, who moved the Amendment, very fairly told us that two distinguished firms in his constituency have decided themselves to absorb the charge. I hope and believe that other firms will follow that excellent example, and as my right hon. Friend said at the very outset, in presenting his Budget, it is certainly the Government's hope and belief that it is not necessary, and will not be the practice,

that a great many industrial firms will pass this charge on automatically, still less impose a profit charge on it when they do pass it on.
Before I leave this subject, the noble Lord asked me a specific question about the voluntary price regulation scheme. The position is that that scheme is in constant negotiation. It is, therefore, open to manufacturers at any stage to ask, if necessary, for the charge to be taken into account in those negotiations, and that argument will, of course, be fully considered in the negotiations, if it is done. As yet, I am told, there has been no request to that effect.
Turning to the Amendment itself, the Amendment differs somewhat from that which the noble Lord moved in Committee. Firstly, because it seeks to exempt from the temporary charge on imports all materials used in the manufacture of pharmaceutical products and not merely the organic chemicals in Chapter 29. Secondly, it does not attempt to limit the exemption, as the previous Amendment did, to materials which are permanently or temporarily exempt from the protective duties. It is, therefore, wider in scope than the Amendment we considered before.
In many cases it is not possible to determine at importation whether or not goods will be used in the manufacture of pharmaceuticals. It is here that the practical difficulty arises in applying the suggested Amendment. Nor does the Amendment provide a definition which could be operated as an exemption at import, or institute any mechanism by which the ultimate use of the goods could be followed up and controlled, as there is, for instance, in the case of the shipbuilding relief scheme. Therefore the Amendment, as put forward, would be unworkable even in relation to pharmaceutical chemicals
Pharmaceutical products in Chapter 30 range a great deal wider than is generally appreciated. Actual drugs and medicines are covered under the headings 30.01 to 30.03. Heading 30.04 includes wadding and bandages, and heading 30.05 a whole miscellany of medical and surgical goods including first-aid boxes and kits, dental fillings, and surgical catgut and other sutures. To exempt the materials which are used in the manufacture of goods under these


two latter headings would have a serious effect on the charge on, for example, plastics, manufactured wood, and textiles, because, of course, the materials which go into wadding and bandgaes and first-aid boxes include materials which are used in a host of other industries.

Sir Harmar Nicholls: One sees the force of the argument being used about Chapter 30 articles—one appreciates that—but would the hon. and learned Gentleman concede the point that for the most part Chapter 29 is used by the pharmaceutical industry, and as such a surcharge as this has by its very nature an element of rough justice about it, would it not be possible in the case of Chapter 29 to put the exemptions is so many words?

Mr. MacDermot: We have considered that point very carefully indeed, because we hoped we might find a solution on those lines, but I am afraid we did not, for reasons I will make clear in a moment.
As the noble Lord made clear, he is concerned particularly, as he was in Committee, with trying to take out of charge partly processed intermediates from which drugs are manufactured. It was this possibility which we examined exhaustively after Committee stage. The importation of finished medicaments is a relatively minor aspect. There are very few finished products which are imported. On the whole, we are concerned with goods manufactured here out of imported chemicals.
The use of these imported chemicals is substantial, and many of them are the same as those used in greater quantity for other industrial purposes. May I give a few examples? Titanium oxide, under heading 28.25, is a whitening agent used in the manufacture of pills and tablets but it has a far greater use in cosmetics and synthetic textiles. I will come in a moment to Chapter 29. Another example from Chapter 28 is zinc oxide, which is in general pharmaceutical use for ointments and surgical dressings, but its major use is industrial, largely in the rubber industry.
Coming to Chapter 29, phenol, under 29.06, is used as a disinfectant and medicament but industrially as an ingredient in plastics and synthetics. Urea, in 29.25, is pharmaceutically used for the treatment

of some kidney troubles but its use for that purpose is small compared with its industrial use for plastics. Ammonia is used in pharmaceutical processing but mainly in general heavy chemical processes. There are three other examples which I will give from Chapter 29—triethanolamine, lactose and nitroglycerine. I could tell hon. Members the industries in which they are used if they were interested.
The result, therefore, we found, of trying to apply the exemption to Chapter 29 would be that a very substantial quantity of chemicals would be exempt which were not primarily used in the pharmaceutical industry but were used in other industries such as the rubber and plastics industries. This would at once provoke a chain reaction which, as we have made clear throughout, is one of the tests which must be applied before we can make an exemption. I hope that hon. Members have appreciated that this is a real difficulty.

Sir Harmar Nicholls: My information was that while a proportion of the materials in Chapter 29 were used in that way, percentage-wise they were mostly used for medicaments. Is that correct?

Mr. MacDermot: The majority of the headings relate to chemicals which for the most part are used in the pharmaceutical industry. I do not accept the hon. Member's argument, but I am not in a position to give a categorical answer one way or the other. My advice is that there are many of these chemicals which are partly used for pharmaceutical purposes but of which a much greater bulk is used in industry. It is because of these difficulties that we are unable to provide by way of straight exemption for the chemicals in Chapter 29.
It may partly answer the hon. Member to be told that the value of imports of organic chemicals under Chapter 29 in 1963 was about £55 million and the value of inorganic chemical imports was about £20 million. To exempt all those would have had a major effect on import savings and would have affected many other industries as well as pharmaceutical manufacture. To exempt only the particular headings in which most of the goods are know to go to the pharmaceutical industry would fail to cover much of the intended field, although it would


arbitrarily benefit a number of users outside it. Thus to exempt throughout the Chapter those chemicals which are of a kind used in pharmaceutical manufacture would cover items whose pharmaceutical use is quite negligible.
An alternative could be to set up a vast administrative machine to try to follow through the chemicals and to repay the charge to pharmaceutical manufacturers where it was established that the chemicals they were using had borne the charge. It is unnecessary for me to go into this because hon. Members will appreciate the impracticability of setting up a bureaucratic machine of that kind for what is, after all, a purely temporary charge.
The question of the effectiveness of drawback on the export trade was again repeated with force. Hon. Members expressed their views based on their experience of the operation of drawback and expressed the fear that the drawback would be an empty offer. As I sought to explain in Committee, the Customs and Excise is proposing to devise a far more flexible scheme for drawback for this temporary charge and appreciates that there are rigidities in the scheme devised for the purpose of drawback of the protective duty.
Where there is an established right to drawback it is simpler to apply that machinry. That will be done because it has already been worked out. In other cases, if an exporter thinks that any material he is using to make export goods has borne the charge, he should take this up with his supplier. I appreciate the point made in debate a number of times that because the supplier is sometimes reluctant to supply this information to his purchasers, it is not easy for the exporter to obtain detailed information about exactly how much of his material has borne the surcharge, and the amount of charge made.
However, if exporters check to see if a charge has been made and then report that matter to their local Customs officer, the intention is that the matter will be taken up with the supplier who will often be more ready to disclose the information, which does not involve the commercial difficulties which might be involved if he supplied it to this purchasers. In that way the Customs officer

will be able to assist exporters to obtain the drawback to which the are entitled.
These matters will be covered by regulations and I ask hon. Members and manufacturers to accept the assurance that it is our intention to apply this scheme very flexibly and to give every assistance to manufacturers to obtain the drawback to which they are properly entitled.
I hope that what I have said is sufficient to convince the House that it is in no spirit of obstinacy that we have felt unable to bring forward the Amendment which hon. Members would like. I repeat that when we come to consider modifications of the imposition of the charge it may be easier for us to meet such points, that we will give early consideration to this matter and that we will treat it with the greatest degree of sympathy.

Mr. Heath: The Financial Secretary gave a detailed explanation of the view of the Government on this matter, a far more detailed explanation than we were able to obtain in Committee. The Amendment was moved in a reasoned way and I wish to express the gratitude of my hon. Friends to the Financial Secretary for trying to meet the point with a similarly reasoned explanation.
It was a rather pleasant experience not to hear the vicious circle of arguments which the Chief Secretary gave us. The Financial Secretary approached the matter in a detailed and practical way, for which we thank him. It was an explanation far unlike some of the speeches made by some of his hon. Friends, who have demonstrated that they are governed more by prejudice against the pharmaceutical industry and by political dogma than they are by the interests of the people who buy the drugs. I thank the hon. and learned Gentleman, the Chancellor and the Board of Trade Ministers for the consideration they have abviously given to the matter in the meantime, and I want now to deal with some of the points mentioned by the Financial Secretary.
First of all, the hon. and learned Gentleman has given an assurance that it is not the intention of the Government to reduce the import of these drugs and, particularly, the import of the life-saving


drugs. But he also said, in very carefully worded sentences, that it was the desire of the Government to apply the brake generally to any increase that was going on. In many ways, that is just as bad. The Government do not wish actually to cut back the drugs coming in to below the present level, but wish to prevent any increase in the drugs coming in. Is that not just as bad? These drugs are not being brought in just for the fun of it, but because they are needed as lifesaving drugs, and the Financial Secretary's use of that expression in relation to drugs, that the object is to prevent an increase of drugs coming into the country, causes considerable anxiety.

10.15 p.m.

Mr. Archie Manuel: Does not the right hon. Gentleman think that he is overstating his case? The words used in the Amendment are
… shall not be charged on goods imported into the United Kingdom and used in the manufacture of pharmaceuticals" …
My hon. and learned Friend the Financial Secretary explained at length that in regard to some, at any rate, of the imports, a rather lesser proportion was used in drug manufacture and a greater proportion in industrial processes.

Mr. Heath: That is true as to part, but the Financial Secretary also said that the Government wanted to prevent growth in these items and that, of course, will affect the growth of items for drugs. He also said, using a very telling expression, that he did not want the drug bill to run away with itself. I can quite appreciate him saying that, as Financial Secretary. That has always been a very sound Treasury view, and I would hope that the Chancellor himself would share it, but it causes perplexity as to why in this case the Chancellor should have allowed his colleagues to abolish the prescription charges, because that is one thing that will allow the drug bill to run away with itself, as everyone knows. So in one case he puts on a 15 per cent. surcharge to prevent the drug bill increasing, if not cutting it back, yet, in the other case, he allows the abolition of the prescription charges. The view of the Treasury and of other Departments in this matter is well known, and I am sorry to see that on this occasion the Chancellor has lost.
The Financial Secretary went on to say that it need have no adverse effects on

the Health Service from the point of view of the Health Service bill. That was because my hon. Friend said that the firms in his constituency would do their best to absorb the charge—I have no doubt that other firms will do the same—and emphasised, quite naturally, that it would be on a temporary basis. But the question was raised whether the Chancellor would be prepared to renegotiate the Voluntary Price Regulation Scheme. I was glad to hear the hon. and learned Gentleman say that if it proved impossible for firms to absorb the charge, they could come along, and would be sympathetically heard in the matter.
The Financial Secretary then dealt with the very important point of exports, raised tonight and in the Committee debate. He described the obviously sincere method by which the Treasury and the Department concerned, and the Customs, will try to deal with this point, but he impressed us all with the tremendous trouble to which everyone has to go, or the pharmaceutical industry has to go, to try to trace through these items in an attempt to get a drawback.
There is no doubt that it will be a cumbrous, complicated and difficult process involving a great deal of work for the firms, as well as for the Customs and the Departments. So it comes back to the fundamental question: if the Financial Secretary is not trying to cut back the amount of drugs, but is prepared to go to all these lengths to help people get the drawback, and not interfere with exports, what is the purpose of putting this surcharge on these items at all?
At this point I will come to his argument that it is practically impossible to separate in these items other uses to which they could be put. We do not argue about the wording of this Amendment—the Financial Secretary has not done so, but has considered Chapter 29 as well as Chapter 30—so we come to the practical question: is it possible to separate the items Here we come to the difficulty of the Government's definition of raw material. The Government have made their own definition, so they are adhering to it as a matter of principle, without showing why, in practice, it is the only acceptable definition.
I was very interested in the list which the Financial Secretary read. It did not include most of the items to which my hon. Friend referred, but it indicated the uses to which these other items are put. They were all fundamental industrial uses of raw materials. As we have constantly said, the cost of these products will be increased. Leaving aside the question of drawback, the increased cost will have repercussions on wages, and so on. Would it not have been better, rather than going to the trouble of putting the surcharge on pharmaceuticals and, at the same time, on all those items which are used in industry, to take off the surcharge on pharmaceuticals while recognising that those industries which use these goods would have the benefit of not paying surcharge?
We had already thought of the suggestion put forward by the Financial Secretary that an alternative would be for the pharmaceuticals to have a drawback on the chemicals used. The hon. and learned Gentleman suggested that that would mean a large bureaucratic machinery, but I should have doubted that. I should have thought that an accountant's certificate from the firm concerned would be sufficient. That is normally accepted by the Board of Trade.

We have examples of that when carrying through procedures on chemicals and fertilisers with reference to the Monopolies Commission. An accountant's certificate showing the amount of these goods used by a pharmaceutical firm, I should have thought, would have been satisfactory to the Chancellor and to the Board of Trade for drawback. I should have thought it would have been possible to take these surcharges off even though we would give the benefit of not having to pay surcharge to industries concerned.

I am grateful for the fact that the Chancellor and his colleagues are to give consideration to this matter, but we do not find the position satisfactory. We are grateful for the assurances about the application which exporters can make to Customs and for the reconsideration which will be found possible, but because we do not believe that the surcharges should have been placed on these goods and that it would have been better that other industrial users should benefit or that an accountant's certificate should be accepted for rebate, I must advise my hon. and right hon. Friends to divide the House on this Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 181, Noes 203.

Division No. 29.]
AYES
[10.23. p.m.


Agnew, Commander Sir Peter
Bruce-Gardyne, J.
Fletcher-Cooke, Sir John (S'pton)


Alison, Michael (Barkston Ash)
Bullus, Wing Commander Sir Eric
Forrest, George


Allan, Robert (Paddington, S.)
Butcher, Sir Herbert
Foster, Sir John


Allason, James (Hemel Hempstead)
Carr, Rt. Hn. Robert
Fraser,Rt.Hn.Hugh(St'fford &amp; Stone)


Astor, John
Channon, H. P. G.
Gammans, Lady


Atkins, Humphrey
Chichester-Clark, R.
Giles, Rear-Admiral Morgan


Awdry, Daniel
Clark, William (Nottingham, S.
Gilmour, Sir John (.East Fife)


Baker, W. H. K.
Cole, Norman
Glover, Sir Douglas


Balniel, Lord
Cooke, Robert
Gower, Raymond


Barlow, Sir John
Cooper-Key, Sir Neill
Gresham-Cooke, R.


Batsford, Brian
Corfield, F. V.
Grieve, Percy


Beamish, Col. Sir Tufton
Costain, A. P.
Griffiths, Peter (Smethwick)


Bell, Ronald
Craddock, Sir Beresford (Spelthorne)
Grimond, Rt. Hn. J.


Bennett, Sir Frederic (Torquay)
Crawley, Aidan
Gurden, Harold


Bennett, Dr. Reginald (Gos &amp; Fhm)
Cunningham, Sir Knox
Hall, John (Wycombe)


Berkeley, Humphry
Curran, Charles
Hall-Davis, A. G. F.


Berry, Hn. Anthony
Currie, G. B. H.
Hamilton, Marquess of (Fermanagh)


Bessell, Peter
Dalkeith, Earl of
Harris, Frederic (Croydon, N. w.)


Biffen, John
Dance, James
Harris, Reader (Heston)


Biggs-Davison, John
Davies, Dr. Wyndham (Perry Barr)
Harvey, John (Walthamstow, E.)


Bingham, R. M.
d'Avlgdor-Goldsmid, Sir Henry
Hawkins, Paul


Birch, Rt. Hn. Nigel
Dean, Paul
Heald, Rt. Hn. Sir Lionel


Black, Sir Cyril
Digby, Simon Wingfield
Heath, Rt. Hn. Edward


Box, Donald
Doughty, Charles
Higgins, Terence L.


Boyd-Carpenter, Rt. Hn. J.
du Cann, Rt. Hn. Edward
Hiley, Joseph


Boyle, Rt. Hn. Sir Edward
Eden, Sir John
Hill, J. E. B. (S. Norfolk)


Brinton, Sir Tatton
Emery, Peter
Hirst, Geoffrey


Bromley-Davenport,Lt.-Col.SirWalter
Errington, Sir Eric
Hobson, Rt. Hn. Sir John


Brooke, Rt. Hn. Henry
Fell, Anthony
Hogg, Rt. Hn. Quintin




Hornby, Richard
Maxwell-Hyslop, R. J.
Sharpies, Richard


Hornsby-Smith, Rt. Hn. Dame P.
Maydon, Lt.-Cmdr. S. L. C.
Shepherd, William


Howe, Geoffrey (Bebington)
Meyer, Sir Anthony
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Hunt, John (Bromley)
Mills, Peter (Torrington)
Spearman, Sir Alexander


Hutchison, Michael Clark
Mills, Stratton (Belfast, N.)
Stainton, Keith


Irvine, Bryant Godman (Rye)
Mitchell, David
Stanley, Hn. Richard


Johnston, Russell (Inverness)
More, Jasper
Summers, Sir Spencer


Jones, Rt. Hn. Aubrey (Hall Green)
Morrison, Charles (Devizes)
Taylor,Edward M. (G'gow,Cathcart)


Jopling, Michael
Mott-Radclyffe, Sir Charles
Taylor, Frank (Moss Side)


Joseph, Rt. Hn. Sir Keith
Murton, Oscar
Thompson, Sir Richard (Croydon,S.)


Kaberry, Sir Donald
Nicholls, Sir Harmar
Thorpe, Jeremy


Kerr, Sir Hamilton (Cambridge)
Nicholson, Sir Godfrey
Tiley, Arthur (Bradford, W.)


Kilfedder, James A.
Noble, Rt. Hn. Michael
Vaughan-Morgan, Rt. Hn. Sir John


Kimball, Marcus
Onslow, Cranley
Walder, David (High Peak)


King, Evelyn (Dorset, S.)
Orr, Capt. L. P. S.
Walker, Peter (Worcester)


Lancaster, Col. C. G.
Osborn, John (Hallam)
Walker-Smith, Rt. Hn. Sir Derek


Litchfield, Capt. John
Page, R. Graham (Crosby)
Wall, Patrick


Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)
Pearson, Sir Frank (Clitheroe)
Walters, Dennis


Lloyd, Ian (P'tsm'th, Langstone)
Peel, John
Ward, Dame Irene


Longden, Gilbert
Peyton, John
Weatherill, Bernard


Loveys, Walter H.
Pitt, Dame Edith
Webster, David


Lubbock, Eric
Pounder, Rafton
Whitelaw, William


Lucas-Tooth, Sir Hugh
Powell, Rt. Hn. J. Enoch
Wilson, Geoffrey (Truro)


McAdden, Sir Stephen
Price, David (Eastleigh)
Wise, A. R.


MacArthur, Ian
Prior, J. M. L.
wolrige-Gordon, Patrick


Mackenzie, Alasdair(Ross &amp; Crom'ty)
Ramsden, Rt. Hn. James
Woodhouse, Hn. Christopher


Mackie, George Y. (C'ness &amp; S'land)
Rawlinson, Rt. Hn. Sir Peter
Woodnutt, Mark


Macleod, Rt. Hn. Iain
Rees-Davies, W. R.
Younger, Hn. George


McMaster, Stanley
Ridley, Hn. Nicholas



McNair-Wilson, Patrick
Ridsdale, Julian
TELLERS FOR THE AYES:


Maginnis, John E.
Roots, William
Mr. Ian Fraser and


Maude, Angus E. U.
Russell, Sir Ronald
Mr. R. W. Elliott.


Maudling, Rt. Hn. Reginald
Scott-Hopkins, James





NOES


Abse, Leo
Edwards, Rt. Hn. Ness (Caerphilly)
Hunter, A. E. (Feltham)


Allaun, Frank (Salford, E.)
Edwards, Robert (Bilston)
Irving, Sydney (Dartford)


Allen, Scholefield (Crewe)
English, Michael
Jackson, Colin


Armstrong, Ernest
Ennals, David
Janner, Sir Barnett


Atkinson, Norman
Ensor, David
Jeger, George (Goole)


Bagier, Gordon A. T.
Evans, Albert (Islington, S.W.)
Jenkins, Hugh (Putney)


Barnett, Joel
Evans, Ioan (Birmingham, Yardley)
Johnson, Carol (Lewisham, S.)


Baxter, William
Finch, Harold (Bedwellty)
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)


Bence, Cyril
Fitch, Alan (Wigan)
Jones, J. Idwal (Wrexham)


Bennett, J. (Glasgow, Bridgeton)
Fletcher, Sir Eric (Islington, E.)
Jones, T. W. (Merioneth)


Binns, John
Fletcher, Ted (Darlington)
Kelley, Richard


Blackburn, F.
Fletcher, Raymond (Ilkeston)
Kenyon, Clifford


Blenkinsop, Arthur
Floud, Bernard
Kerr, Dr. David (W'worth, Central)


Boardman, H.
Foot, Sir Dingle (Ipswich)
Leadbitter, Ted


Bowden, Rt. Hn. H. W. (Leics S.W.)
Foot, Michael (Ebbw Vale)
Lever, L. M. (Ardwick)


Boyden, James
Fraser, Rt. Hn. Tom (Hamilton)
Lewis, Arthur (West Ham, N.)


Braddock, Mrs. E. M.
Freeson, Reginald
Lewis, Ron (Carlisle)


Bradley, Tom
Galpern, Sir Myer
Lomas,Kenneth


Bray, Dr. Jeremy
Garrow, A.
Loughlin, Charles


Broughton, Dr. A. D. D.
George, Lady Megan Lioyd
Mabon, Dr. J. Dickson


Brown, Hugh D. (Glasgow, Provan)
Ginsburg, David
McBride, Neil


Brown, R. W. (Shoreditch &amp; Fbury)
Gourlay, Harry
McCann, J.


Buchan, Norman (Renfrewshire, W.)
Gregory, Arnold
MacColl, James


Buchanan, Richard
Grey, Charles
MacDermot, Niall


Butler, Herbert (Hackney, C.)
Griffiths, David (Rother Valley)
McGuire, Michael


Butler, Mrs. Joyce (Wood Green)
Hale, Leslie
McInnes, James


Callaghan, Rt. Hn. James
Hamilton, James (Bothwell)
MacKenzie, Gregor (Rutherglen)


Carmichael, Neil
Hamling, William (Woolwich, W.)
MacPherson, Malcolm


Carter-Jones, Lewis
Hannan, William
Mahon, Peter (Preston, S.)


Castle, Rt. Hn. Barbara
Harper, Joseph
Mahon, Simon (Bootle)


Coleman, Donald
Harrison, Walter (Wakefield)
Mallalieu, E. L. (Brigg)


Conlan, Bernard
Hart, Mrs. Judith
Mallalieu,J.P.W.(Huddersfield,E.)


Craddock, George (Bradford, S.)
Hayman, F. H.
Manuel, Archie


Cullen, Mrs. Alice
Hazell, Bert
Mapp, Charles


Dalyell, Tam
Herbison, Rt. Hn. Margaret
Marsh, Richard


Davies, G. Elifed (Rhondda, E.)
Hobden, Dennis (Brighton, K'town)
Mason, Roy


Davies, Harold (Leek)
Holman, Percy
Maxwell, Robert


Davies, Ifor (Gower)
Horner, John
Mendelson, J. J.


Davies, S. O. (Merthyr)
Houghton, Rt. Hn. Douglas
Mikardo, Ian


Delargy, Hugh
Howarth, Harry (Wellingborough)
Millan, Bruce


Dell, Edmund
Howarth, Robert L. (Bolton, E.)
Miller, Dr. M. S.


Diamond, John
Howell, Denis (Small Heeath)
Milne, Edward (Blyth)


Dodds, Norman
Howie, W.
Molloy, William


Donnelly, Desmond
Hoy, James
Morris, Alfred (Wythenshawe)


Driberg, Tom
Hughes, Emrys (S. Ayrshire)
Morris, Charles (Openshaw)


Duffy, Dr. A. E. P.
Hughes, Hector (Aberdeen, N.)
Murray, Albert


Edelman, Maurice
Hunter, Adam (Dunfermline)
Neal, Harold







Norwood, Christopher
Rogers, George (Kensington, N.)
Thornton, Ernest


Oakes, Gordon
Ross, Rt. Hn. William
Tinn, James


Ogden, Eric
Rowland, Christopher
Urwin, T. W.


O'Malley, Brian
Sheldon, Robert
Varley, Eric G.


Oram, Albert E. (E. Ham, S.)
Shore, Peter (Stepney)
Wainwright, Edwin


Orbach, Maurice
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)
Walker, Harold (Doncaster)


Orme, Stanley
Short, Mrs. Renée(W'hampton,N.E.)
Wallace, George


Oswald, Thomas
Silkin, John (Deptford)
Warbey, William


Page, Derek (King's Lynn)
Silkin, S. C. (Camberwell, Dulwich)
Watkins, Tudor


Pargiter G. A.
Silverman, Julius (Aston)
Weitzman, David


Park, Trevor (Derbyshire, S.E.)
Slater, Mrs. Harriet (Stoke, N.)
Wells, William (Walsall, N.)


Parkin, B. T.
Slater, Joseph (Sedgefield)
Wilkins, W. A.


Pavitt, Laurence
Small, William
Williams, Alan (Swansea, W.)


Pentland, Norman
Snow, Julian
Wilson, William (Coventry, S.)


Popplewell, Ernest
Solomons, Henry
Winterbottom, R. E.


Probert, Arthur
Soskice, Rt. Hn. Sir Frank
Woof, Robert


Redhead, Edward
Spriggs, Lesile
Wyatt, Woodrow


Rees, Merlyn
Stewart, Rt. Hn. Michael
Yates, Victor (Ladywood)


Richard, Ivor
Stones, William



Robertson, John (Paisley)
Symonds, J. B.
TELLERS FOR THE NOES:


Robinson, Rt.Hn. K.(St.Pancras,N.)
Taverne, Dick
Mr. Whitlock and Mr. Lawson.


Rodgers, William (Stockton)
Thomas, George (Cardiff, W.)

Mr. Heath: I beg to move Amendment No. 6, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on newsprint and printing paper.
Of all the many confusions into which the Government have fallen in the imposition of the surcharge, that which relates to newsprint and printing paper, with which this Amendment deals, is probably the greatest of all.
We had a brief debate in Committee on this subject at a very late hour which was answered by the Minister without Portfolio. Let me make it plain that I am not suggesting that he gave any assurances on this point. In fact, he was quite clear at the end that he had given consideration to the matter but that he could not do anything about it.
At the same time, I thought that I detected in his manner when we were putting the arguments to him that it was a point with which he had considerable sympathy because he saw the inherently ridiculous situation to which he had reduced himself. This is shown in his remarks. He referred to our intervention in the debate on the Address and he then recalled that contrary to the Government's first intention they had now removed
books, newspapers, maps, charts, manuscripts, typescripts, stamps, and so on …
and it was agreed in Committee that this meant that the final manufactured product in its entirety was now removed from the surcharge. This we welcomed. This showed that considerable progress had been made by any standards of this Government.
The Minister without Portfolio then went on to point out that raw paper-making materials, pulp and waste paper, were also excluded from the surcharge. We have now reached a situation therefore where the final product is excluded and the waste paper and pulp are excluded and the only items that receive the surcharge are the middle group of newsprint and paper for making books.
It was to this point that the Minister without Portfolio had to address himself, and all he could say was:
While it is true that there is an element of anomaly it is inevitable, having regard to

the circumstances in which the exemptions are made."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 672.]
And "element of anomaly" was a most modest understatement even for the Minister with Portfolio.
We say that there is nothing inevitable about this. It is a deliberate act by the Government to impose these surcharges on material for making books and newsprint for newspapers. As this newsprint has to be imported, most of it from Canada or E.F.T.A. countries under long-term contracts, it means that newsprint has to bear the 15 per cent. surcharge.
We do not regard this as in any way inevitable. I suggest that the Government should reconsider this deliberate act on their part and remove these items. I hope that whoever answers the debate—and I may be forgiven for hoping after the last performance that it will be the Financial Secretary to the Treasury with at least a reasoned argument—will address himself to this point.
The justification so far produced by the Government is that to omit these would lead to an anomaly. I suppose that the argument is that other items of processed raw materials would then claim to be excluded, but I do not think that the Financial Secretary would claim that these items are used in other products. We have discussed on many occasions the point that items which are processed raw materials ought not to carry the surcharge, which will be a charge on industry and will raise prices. We would say in any case that as raw materials these items should be excluded.
The Financial Secretary has further justification for agreeing. He could say that on one item of policy in 52 days the Government will be absolutely consistent, in not putting a surcharge on the basic raw material, the pulp, in not putting the surcharge on the halfway house of newsprint and paper for making books, and in not putting it on the finished products, the books and newspapers themselves. I therefore offer to him this glorious opportunity of establishing fame for himself in this all too long-lived Administration by being absolutely consistent on one item in this scheme of things. Let him say for once that we shall not have the surcharge on one particular item, because to say that we must


not have it on the basic material nor on the finished product but must have it half-way is the most inconsistent of any attitude which he could possibly take on any item in this whole scheme. We appealed last time, for the first time in a hundred years, that a Government should not put a tax on knowledge. This is a fundamental matter of principle. But let him also, for the first time in 52 days, be completely consistent and remove the surcharge from these items.

Mr. MacDermot: Fifty-two days is quite long enough for me to learn to avoid the temptations and seductions of flattery. I assure the right hon. Member for Bexley (Mr. Heath) that I shall try to give him a reasoned argument, and I hope to persuade him that the Government, on the 52nd as on all other days, are being absolutely consistent in what they do.
The Amendment is similar in scope to one which was rejected in Committee without a Division after a firm rejection by the Government explained by my hon. Friend the Minister without Portfolio. The Opposition rest their case on the alleged anomaly that books and other printed matter are exempted. This exemption itself was an anomaly in that it is one of the very few cases in which finished goods as opposed to raw materials are exempted, but there were special grounds for that anomalous exemption. These grounds, which do not apply to the subject matter of the Amendment, namely, newsprint and printing paper, were the existence of an international agreement reached within U.N.E.S.C.O. for exempting these items from all import duties.
That exemption, therefore, was defensible, and it was defensible abroad as well as at home. The House will not need me to stress the importance of that consideration. But the agreement did not extend to newsprint or to printing paper, nor can the exemption of newsprint and printing paper be justified on the ground that they are raw materials in the sense in which we have made clear we apply the words, meaning materials in their natural state or crudely processed. These are fully manufactured products which are all machine-made.
As the right hon. Gentleman said, we have exempted the true raw materials, within the definition, for paper making, namely, pulp and waste paper. If we were to make the further exemptions in the Amendment, we should have to find a principle on which we could do so which would not lead to irresistible pressure from many of the other hard cases which are all pressing for favoured treatment. If we were to accept the Amendment, we should immediately create an anomaly which would open the door to a far wider round of claims that we had exempted a processed material without the assistance of any existing international agreement or anything of that kind to justify it, and a vast number of other industries could claim that the anomaly should not be allowed to remain but that other processed materials should be exempted.
No such principle has been advanced save that finished products in the form of books and other printed matter are exempted. But they are covered by the international agreement whereas paper and newsprint are not. For these reasons, we feel unable to advise the House to accept the Amendment. We see no ground upon which we could justify the exemption, and we are sure that we should be storing up trouble for ourselves if we were to make it.

Mr. Heath: I believe, Mr. Deputy-Speaker, that I have the right of reply.

Mr. Deputy-Speaker (Dr. Horace King): The right hon. Gentleman must have the leave of the House to speak again.

Mr. Heath: If I may speak again, by leave of the House, I would mention two things. First, I am disappointed that the Financial Secretary to the Treasury should be adhering to the previous decision of the Minister without Portfolio. I am even more disappointed to learn that the Government took the surcharge off not because they believed it to be right to do so on its merits but as a belated attempt to comply with the U.N.E.S.C.O. Agreement. It is a grievous disappointment because I thought the Government were saying that they ought not to tax knowledge, as they had begun to do. It is a retrograde step.
Secondly, the Financial Secretary says that he would be open to irresistible pressure. I do not know that he need worry about that. He has so far resisted every pressure put on him in connection with the surcharge by Parliamentary or extra-parliamentary means. Why he should be worried in this case I cannot imagine, particularly when he could say to anyone who challenged him that for more than 100 years of British

history every Government has accepted the principle of not taxing knowledge.

Because we believe it wrong in principle and avoidable in practice, I shall advise my hon. Friends to press the Amendment to a Division.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 159, Noes 179.

Division No. 30.]
AYES
[10.45 p.m.


Agnew, Commander Sir Peter
Gresham-Cooke, R.
More, Jasper


Alison, Michael (Barkston Ash)
Grieve, Percy
Morrison, Charles(Devizes)


Allan, Robert(Paddington, S.)
Griffiths, Peter(Smethwick)
Mott-Radclyffe, Sir Charles


Allason, James (Hemel Hempstead)
Grimond, Rt. Hn. J.
Murton, Oscar


Astor, John
Gurden, Harold
Nicholls, Sir Harmar


Awdry, Daniel
Hall, John(Wycombe)
Nicholson, Sir Godfrey


Baker, W. H. K.
Hall-Davis, A. G. F.
Noble, Rt. Hon. Michael


Balniel, Lord
Hamilton, Marquess of (Fermanagh)
Onslow, Cranley


Batsford, Brian
Harris, Frederic (Croydon, N. W.)
Orr, Capt. L. P. S.


Beamish, Col. Sir Tufton
Harris, Reader (Heston)
Osborn, John (Hallam)


Berkeley, Humphry
Harvey, John (Walthamstow, E.)
Page, R. Graham (Crosby)


Berry, Hn. Anthony
Hawkins, Paul
Pearson, Sir Frank (Clitheroe)


Bessell, Peter
Heald, Rt. Hn. Sir Lionel
Peel, John


Biffen, John
Heath, Rt. Hn. Edward
Peyton, John


Biggs-Davison, John
Higgins, Terence L.
Pitt, Dame Edith


Bingham, R. M.
Hiley, Joseph
Pounder, Rafton


Birch, Rt. Hn. Nigel
Hill, J. E. B. (S. Norfolk)
Powell, Rt. Hn. J. Enoch


Black, Sir Cyril
Hirst, Geoffrey
Price, David (Eastleigh)


Box, Donald
Hogg, Rt. Hn. Quintin
Prior, J. M. L.


Boyd-Carpenter, Rt. Hn. J.
Hornby, Richard
Ramsden, Rt. Hn. James


Boyle, Rt. Hn. Sir Edward
Hornsby-Smith, Rt. Hn. Dame P.
Rawlinson, Rt. Hn. Sir Peter


Brinton, Sir Tatton
Howe, Geoffrey (Bebington)
Ridley, Hn. Nicholas


Brooke, Rt. Hn. Henry
Hunt, John (Bromley)
Roots, William


Bruce-Gardyne, J.
Irvine, Bryant Godman (Rye)
Russell, Sir Ronald


Butcher, Sir Herbert
Johnston, Russell (Inverness)
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Carr, Rt. Hn. Robert
Jones, Rt. Hn. Aubrey (Hall Green)
Spearman, Sir Alexander


Channon, H. P. G.
Jopling, Michael
Stainton, Keith


Chichester-Clark, R.
Joseph, Rt. Hn. Sir Keith
Stanley, Hn. Richard


Clark, William (Nottingham, S.)
Kaberry, Sir Donald
Summers, Sir Spencer


Cole, Norman
Kerr, Sir Hamilton (Cambridge)
Taylor, Edward M. (G'gow, Cathcart)


Cooke, Robert
Kilfedder, James A.
Taylor, Frank (Moss Side)


Cooper, A. E.
Kimball, Marcus
Thompson, Sir Richard (Croydon,S.)


Cooper-Key, Sir Neill
King, Evelyn (Dorset, S.)
Thorpe, Jeremy


Corfield, F. V.
Lancaster, Col. C. G.
Tiley, Arthur (Bradford, W.)


Costain, A. P.
Litchfield, Capt. John
Vaughan-Morgan, Rt. Hn. Sir John


Crawley, Aldan
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)
Walder, David (High Peak)


Cunningham, Sir Knox
Lloyd, Ian (P'tsm'th, Langstone)
Walker, Peter (Worcester)


Curran, Charles
Longden, Gilbert
Walker-Smith, Rt. Hn. Sir Derek


Currie, G. B. H.
Loveys, Walter H.
Wall, Patrick


Dance, James
Lubbock, Eric
Walters, Dennis


Davies, Dr. Wyndham (Perry Barr)
Lucas-Tooth, Sir Hugh
Ward, Dame Irene


d'Avigdor-Goldsmid, Sir Henry
MacArthur, Ian
Weatherill, Bernard


Dean, Paul
Mackenzie, Alasdair (Ross &amp; Crom'ty)
Webster, David


Digby, Simon Wingfield
Mackie, George Y. (C'ness &amp; S'land)
Whitelaw, William


du Cann, Rt. Hn. Edward
Maclean, Sir Fitzroy
Wilson, Geoffrey (Truro)


Eden, Sir John
Macleod, Rt. Hn. Iain
Wise, A. R.


Emery, Peter
McMaster, Stanley
Wolrige-Gordon, Patrick


Errington, Sir Eric
McNair-Wilson, Patrick
Woodhouse, Hn. Christopher


Fletcher-Cooke, Sir John (S'pton)
Maginnis, John E.
Woodnutt, Mark


Forrest, George
Maudling, Rt. Hn. Reginald
Younger, Hn. George


Foster, Sir John
Maxwell-Hyslop, R. J.



Fraser, Rt. Hn. Hugh (Stlfford &amp; Stone)
Maydon, Lt.-Cmdr. S. L. C.
TELLERS FOR THE AYES:


Giles, Rear-Admiral Morgan
Meyer, Sir Anthony
Mr. Ian Fraser and


Glover, Sir Douglas
Mills, Stratton (Belfast, N.)
Mr. R. W. Elliott.


Gower, Raymond
Mitchell, David





NOES


Abse, Leo
Baxter, William
Braddock, Mrs. E. M.


Allaun, Frank (Salford, E.)
Bence, Cyril
Bradley, Tom


Allen, Scholefield (Crewe)
Bennett, J. (Glasgow, Bridgeton)
Bray, Dr. Jeremy


Armstrong, Ernest
Binns, John
Broughton, Dr. A. D. D.


Atkinson, Norman
Blackburn, F.
Brown, Hugh D. (Glasgow, Provan)


Bagier, Gordon A. T.
Blenkinsop, Arthur
Brown, R. W. (Shoreditch &amp; Fbury)


Barnett, Joel
Bowden, Rt. Hn. H. W. (Leics S. W.)
Buchan, Norman (Renfrewshire, W.)




Buchanan, Richard
Horner, John
Orbach, Maurice


Callaghan, Rt. Hn. James
Howarth, Harry (Wellingborough)
Orme, Stanley


Carmichael, Neil
Howell, Denis (Small Heath)
Oswald, Thomas


Carter-Jones, Lewis
Howie, W.
Page, Derek (King's Lynn)


Castle, Rt. Hn. Barbara
Hoy, James
Pargiter, G. A.


Coleman, Donald
Hughes, Emrys (S. Ayrshire)
Parkin, B. T.


Conlan, Bernard
Hughes, Hector (Aberdeen, N.)
Pavitt, Laurence


Cullen, Mrs. Alice
Hunter, Adam (Dunfermline)
Popplewell, Ernest


Dalyell, Tam
Irving, Sydney(Dartford)
Probert, Arthur


Davies, G. Elfed (Rhondda, E.)
Jackson, Colin
Redhead, Edward


Davies, Harold (Leek)
Janner, Sir Barnett
Rees, Merlyn


Davies, Ifor (Gower)
Jeger, George (Goole)
Richard, Ivor


Davies, S. O. (Merthyr)
Jenkins, Hugh (Putney)
Robertson, John (Paisley)


Delargy, Hugh
Johnson, Carol (Lewisham, S.)
Robinson, Rt. Hn. K. (St. Pancras, N.)


Dell, Edmund
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Rodgers, William (Stockton)


Diamond, John
Jones, J. Idwal (Wrexham)
Rogers, George (Kensington, N.)


Dodds, Norman
Jones, T. W. (Merioneth)
Ross, Rt. Hn. William


Donnelly, Desmond
Kelley, Richard
Rowland, Christopher


Driberg, Tom
Kenyon, Clifford
Sheldon, Robert


Duffy, Dr. A. E. P.
Kerr, Dr. David (W'worth, Central)
Shore, Peter (Stepney)


Edelman, Maurice
Lawson, George
Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)


Edwards, Rt. Hn. Ness (Caerphilly)
Leadbitter, Ted
Short, Mrs. Renée (W'hampton, N. E.)


Edwards, Robert (Bilston)
Lever, L. M. (Ardwick)
Silkin, John (Deptford)


English, Michael
Lewis, Ron (Carlisle)
Silkin, S. C. (Camberwell, Dulwich)


Ennals, David
Lomas, Kenneth
Slater, Mrs. Harriet (Stoke, N.)


Evans, Albert (Islington, S. W.)
Loughlin, Charles
Slater, Joseph (Sedgefield)


Evans, Ioan (Birmingham, Yardley)
McBride, Neil
Snow, Julian


Fitch, Alan (Wigan)
MacColl, James
Solomons, Henry


Fletcher, Sir Eric (Islington, E.)
MacDermot, Niall
Soskice, Rt. Hn. Sir Frank


Fletcher, Ted (Darlington)
McGuire, Michael
Spriggs, Leslie


Fletcher, Raymond (Ilkeston)
Mclnnes, James
Stewart, Rt. Hn. Michael


Floud, Bernard
MacKenzie, Gregor (Rutherglen)
Taverne, Dick


Foot, Sir Dingle (Ipswich)
MacPherson, Malcolm
Thomas, George (Cardiff, W.)


Foot, Michael (Ebbw Vale)
Mahon, Peter (Preston, S.)
Thornton, Ernest


Fraser, Rt. Hn. Tom (Hamilton)
Mahon, Simon (Bootle)
Tinn, James


Freeson, Reginald
Mallalieu,J.P.W.(Huddersfield,E.)
Urwin, T. W.


Galpern, Sir Myer
Manuel, Archie
Varley, Eric G.


Garrow, E.
Mapp, Charles
Wainwright, Edwin


Ginsburg, David
Marsh, Richard
Walker, Harold (Doncaster)


Gourlay, Harry
Maxwell, Robert
Wallace, George


Gregory, Arnold
Mendelson, J. J.
Warbey, William


Grey, Charles
Mikardo, Ian
Watkins, Tudor


Griffiths, David (Rother Valley)
Millan, Bruce
Wells, William (Walsall, N.)


Hale, Leslie
Miller, Dr. M. S.
Wilkins, W. A.


Hamilton, James (Bothwell)
Milne, Edward (Blyth)
Williams, Alan (Swansea, W.)


Hamilton, William (West Fife)
Molloy, William
Wilson, William (Coventry, S.)


Hannan, William
Morris, Alfred (Wythenshawe)
Winterbottom, R. E.


Harper, Joseph
Morris, Charles (Openshaw)
Woof, Robert


Harrison, Walter (Wakefield)
Murray, Albert
Wyatt, Woodrow


Hayman, F. H.
Norwood, Christopher
Yates, Victor (Ladywood)


Hazell, Bert
Oakes, Gordon



Herbison, Rt. Hn. Margaret
Ogden, Eric
TELLERS FOR THE NOES:


Hobden, Dennis (Brighton, K'town)
O'Malley, Brian
Mr. Whitlock and Mr. McCann.


Holman, Percy
Oram, Albert E. (E. Ham, S.)

Mr. John Hall: I beg to move Amendment No. 7, in page 4, line 35, at the beginning to insert:
(1) Duty under section 3 of this Act shall not be charged on wood and wood products used in the building of homes or the manufacture of furniture.
My right hon. and hon. Friends and I have been moved to table the Amendment, first, because during the debate on this subject in Committee the only two hon. Members on the Government side who spoke were both in favour of doing exactly what we now seek to do, and, secondly, because of a rather sympathetic reply that we were fortunate enough to receive from the Minister of State, Board of Trade, in which he said:
We are sensitive to the arguments used about wood and wood products, and we have already undertaken that this shall be one

of the fields which will be included in early consideration of the review of the coverage."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 667.]
I hope that the Minister has become so sensitive to the question of wood and wood products that he will be prepared to accept our Amendment, but in case he has not, if he has not quite reached the degree of sensitivity which we would like to see in him, I should, perhaps, deploy a few more arguments to help him reach that desirable stage of receptiveness.
I do not propose to go into detail, because the details were fully covered in Committee, although one would, perhaps, like to draw attention to some of the extraordinary anomalies existing between woods which are subject to surcharge and those which are not. One which I have


in mind particularly is the exemption from surcharge of wood to be used for golf clubs and umbrella handles. I fail to understand why that should be exempted. Nevertheless, I want to deal not with detail, but with the basic principles which have led us to table the Amendment.
We must assume that the Government did not wish, in the first place, to reduce the rate of house building. They cannot have wanted to do that, because they have accepted, perhaps reluctantly, the target for house building that we on this side established. We must assume that the Government did not wish to discourage the development of the non-traditional type of housing, the kind of housing which uses, fortunately or unfortunately, rather more wood than the traditional type of housing but, nevertheless, the kind of housing which can be erected much more quickly than the more traditional type. I assume that the Government wish to encourage the continuation of that type of development.
One must assume that the Government did not wish to reduce the availability of furniture, without which any of the new houses being built would be useless. It is no use having a house without furniture to put into it. We must assume that the Government did not wish to cause unemployment in the furniture industry or to create greater difficulties for the small man. I stress that latter phrase because, in furniture particularly, as the Minister of State knows, the industry is made up largely of small firms.
If we are right in that assumption, we can only assume that the Government must have believed, first, that the wood imported in its rough state—that is, the wood covered by headings 44.01 to 44.12, which is exempt—could be processed in this country and that thereby the needs of the building and furniture industries would be met. That must have been one of the Government's assumptions. Secondly, they must have believed that few, if any, forward contracts had been entered into, so that the measures which they have taken to impose the surcharge would, to use their own expression, bite immediately and would have the effect of restricting imports. I suggest that both of those beliefs are demonstrably false.
11.0 p.m.
In the first place, many of the products which are covered by the headings

which are not excluded from the impact of the surcharge cannot be replaced in this country. Let me take some examples. Imported plywood cannot be replaced by British production. The furniture industry imports nearly 100 per cent. of its plywood requirements. Practically 100 per cent. of block board which is used in the furniture industry has to be imported, and about 90 per cent. of the veneers which are used in the furniture industry have to be imported. British production is quite inadequate to meet the demands put upon it by the furniture and building industries of this country.
If it is suggested that the placing of the surcharge on the importation of these products will stimulate production in this country, it must mean, presumably, that the surcharge is to remain much longer than we had been led to believe, because, quite clearly, it is useless for anybody to set up and establish facilities to provide these products which are now imported if the surcharge is to be taken off in a matter of months; it would be wasted capital development. Therefore, it cannot be anticipated that British production will be increased by any appreciable extent to meet the requirements of both the furniture and building industries.
Thirdly, there have been many forward contracts already placed, and therefore the new duty—this particularly applies to softwoods and to plywoods—cannot affect the import of materials for some months. If, again, we are correct in assuming that the surcharge is temporary, and, indeed, is likely to be reviewed at a very early date, and sympathetically reviewed, we gather from the Minister of State, we can hope the surcharge will be removed in a matter of months. So the total effect of the surcharge will not be to discourage imports, because they will come in because of the forward contracts which have already been placed. It will merely mean increased cost to the users in this country and, of course, increased revenue accruing to the Treasury.
Let me stress emphatically that both the building and furniture industries must continue importing their raw materials at the same rate as they are now importing them unless they are drastically to reduce output. If they


are not going to reduce output but are to continue to import at the same rate, then it is inevitable that prices will increase. In the furniture industry the situation is worsened by the fact that upholstery materials are subject to the surcharge as well, and a large quantity of the upholstery material used in the furniture industry comes from Belgium. So to that extent the situation will be worsened in that industry. We take it—one must take it—that the Government do not want to reduce the provision of homes; that they do not want to reduce the provision of furnished homes for the people of this country. Presumably also, they do not want increased prices. I assume they do not want this, but the very action they are now taking will have just this effect.
I hope that in his answer the Chief Secretary, who, I gather, is to reply, will not use the argument he used earlier and which was first advanced, I think, by the Minister without Portfolio in a debate on 2nd December, when he said:
My argument was that if one extends the exemption and then narrows the field on which the surcharge is to operate, to any considerable extent, the same result in reducing our balance of payments position would not be achieved unless the same rate of surcharge was increased."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 482.]
This was the argument the Chief Secretary was using.
The Amendments which were moved in Committee and have been moved now were designed to lift the burden from materials which must be imported if industry is to expand economically, and, in some cases, must be imported if the health, education, and housing of this country's people are not to be penalised.
If the Minister's arguments, deployed in Committee and again by the Chief Secretary today, mean anything, they mean either that the Government are prepared to accept reduced industrial activity and the harm which may be done to the social life of the people or, knowing that these imports must continue, that they wish to obtain the same estimated revenue by imposing an additional tax on the people. It must be one or the other.
I prefer to believe that the Government did not give themselves sufficient time to think out the implications of what they were doing, and I am sufficiently optimistic

to believe that the Minister of State, who expressed himself as being sensitive to the case deployed for wood and wood products, will come to the conclusion, as will his hon. and right hon. Friends, that perhaps a mistake was made in this case and that there is an overwhelming argument for removing surcharge from the rest of the wood products covered by the Amendment and by other Amendments discussed in Committee. This would remove from house building and the furniture industry a severe surcharge which could only increase the cost of living.

Sir D. Glover: I will not detain the House for more than a moment because I deployed in Committee most of the arguments which I shall deploy on this occasion, but I take this opportunity to intervene because when I spoke in Committee I was incorrectly reported in HANSARD and I should like the record corrected. In Committee I said that this surcharge would put up the cost of a house and the furniture in it by £150. I was reported as having said that it would put up the cost of a house by £150 and the cost of the furniture by another £150. I should like to put on record that I said that the increase would be £150 for the house and furniture.
I am sure that the Amendment ought to be accepted unless the Government admit that the whole object of the surcharge on wood and wood products for house building and furniture is to be deliberately deflationary. We have been told that that is not the Government's object. The right hon. Gentleman the Minister of Public Building and Works in the House said, with great pride, that his Department had arranged with the brick-making industry to increase the production of bricks by 7,000 million so that the target of 400,000 houses-plus could be reached next year. In another speech he said that nothing, not even an £800 million deficit, would affect his determination to increase the production of the construction industry, particularly in house building. That is the position of one Department.
Here we have another Department putting a 15 per cent. surcharge on wood. If the industry are to build more houses, it will obviously import more wood. I should have thought that this point was so simple as not to need discussing. If


the people who move into the houses are to do other than sit on empty tea chests, they will buy more furniture. Therefore the surcharge on wood and wood products will increase the price of both houses and furniture—the production of which the Government are determined shall be increased.
The only way in which the Chancellor can justify this is by saying, "This is part of my stop-go policy. This is deflationary, and it is meant to be deflationary. The houses will cost more, the furniture will cost more, and therefore people will not be able to spend their money on some other things which we want exported." I could understand that argument, but in Committee the argument was that the Government could not remove the surcharge from these products because to do so would open the floodgates to all sorts of things, which I believe to be nonsense. We have got to the position when one can import firewood without the surcharge but not wood for house building. One can import foie gras and caviar without the surcharge but not drugs to cure people. This has been so ill thought out that the Chancellor should take this part of the Bill back and have a good look at it because many of its provisions are just nonsense.

Mr. A. P. Costain: The attitude of the Government towards the Amendment gives an indication of how long the surcharge will remain because the House will appreciate that at this time of the year most of our imports of softwoods come from the Baltic ports, which will soon be frozen up. There will be no other imports of softwoods between now and next May or June, so we have a good indication of how long the surcharge will be with us.
I agree with the remarks of my hon. Friend the Member for Ormskirk (Sir D. Glover) about our being able to import firewood without surcharge. Indeed, we can make firewood in this country, which is more than can be said of many other lumber products. If we are forced again to say, "We have altered our designs to allow timber to be manufactured prefabricated here," there is a danger that we will return to the old mistakes in the timber industry.
I fear that the Government have forgotten that nature does not produce timber of all the same length. There

is a great deal of wastage in the timber industry because of this and, as I mentioned, we now have an indication of how long the surcharge will last.

Mr. Hirst: Like my hon. Friend the Member for Ormskirk (Sir D. Glover), I will not detain the House for long, because I, too, spoke about this subject in Committee. It is not as simple a matter as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) indicated, although I know that he appreciates that a vast range of woods comes into this, and not merely the softwoods to which he referred.
I have a constituency interest in this matter because I have in my area one of the largest joinery firms in the country. Great concern has been expressed to me about the surcharge because of the extremely short supply of certain woods here, one of them being plywood. By far the greater part of this, and other woods, is imported—from ports which will not be frozen up, my hon. Friend the Member for Folkestone and Hythe will be pleased to hear. This material must be imported if we are to have any-think like the completion of house building already started. I feel sure that the Government do not want that work to stop.
This leads on to the question of availability and essentiality. I still maintain—and I will go on maintaining this long after this miserable Bill has become an Act—that these are perfectly valid points which should receive the Chancellor's consideration. It is shocking that the Government have obviously not taken these matters properly into account.
There is another wide range of items about which we have received no comment from the Government. There is, for example, the special type of timber used as the raw material for light packing cases. In Committee, I spoke of fluting in reels and other materials. I also spoke of the manufacture of 30-dozen egg crates, how the import surcharge will increase their cost by 10 per cent. and how we use 20 million or more of them. Although, in this case, the 30-dozen packing case is vital for getting this type of food to the consumer—remembering, of course, that the food itself is not subject to the charge—the packing case is and will be increased in price by about 10 per cent.
It is obvious that the Government have not thought this out. What is the sense in putting a heavy surcharge on an article which is vital to enable manufacturers to get the food to the people? I have given just this one example of how unfair the surcharge is. Government policy agrees that the food must be made available to the public, yet the crates which are vitally necessary to get the food to them have this heavy surcharge placed on them.
I sought in Committee to explain to the Government how severely the surcharge will affect the cost of fibre board, the goods made from it, and so on. I do not know about furniture, but I do know that there may still be a chance, even at this late stage, that Government spokesmen will get away from their pre-marked "reject" briefs, "come clean" and realise that we have made such a good case that the Bill should be altered.

11.15 p.m.

Sir Harmar Nicholls: I want merely to ask if there have been any representations from local councils about this because, in recent years, Labour-controlled councils, in particular, have been very vocal about the need for keeping down the cost of council housing. At no previous time has the cost of council house building been put up as a direct result of this sort of Government action. I submit that if representations on these lines have been made they should be taken into account, and, if not, the hon. Gentleman should realise the pain which the Government's action will cause and keep that fact well in mind.

Mr. Diamond: I can answer that point by the hon. Member for Peterborough (Sir Harmar Nicholls) straight away. No such representations have been made, but, of course, I cannot say whether any will be. If they were made, then one would draw the attention of the delegation to the facts of the case; and I would like to tell the Committee—although I think that it is a fact, which has already been made clear —that the cost of the ordinary, three bedroom council house will, as a result of the Government's proposal, go up by about one-half of 1 per cent.
Of course, the Government do not want the cost of any council house to rise by half of 1 per cent., but we really must

keep a sense of proportion. One does not believe—I certainly do not believe it—that the building industry of this country is quite incapable of absorbing a figure of that kind, be it in terms of housing or furniture.
Is it suggested that by redesigning, especially of furniture, by the simplification of design, by greater efficiency in machining, or by greater accuracy in machining, such an amount cannot be absorbed? I do not believe that our furniture industry, or our house builders, would be unwilling, much less incapable, of attempting to meet that charge without passing it on to the purchaser of the furniture or the house.

Mr. John Hall: Does the hon. Gentleman not realise that to redesign furniture, or anything else, takes time? One has to prepare prototypes, and so on. We have repeatedly been told that this surcharge is temporary in its incidence. If that is so, what encouragement is there for manufacturers to get down to redesigning when the need for it may have passed within, say, a couple of years?

Mr. Diamond: Hon. Members opposite are always acting as if all people have minds as inflexible as their own, that British industry is not willing to seek greater efficiency, to show greater energy, to make greater investment, and so on. I do not believe that our businessmen behave in that way. Even if that was so, we say that this is a stimulus, and, I would add, that the fact should be brought to their attention.
The hon. Gentleman talks of a temporary surcharge. That being so, I cannot agree with him that businessmen worth their salt will not attempt to meet this situation. I just do not agree with him. Redesigning is going on all the time. The total of the timber content of a house is something which is being studied all the time.

Sir Harmar Nicholls: The hon. Gentleman is in a dilemma. He is lost in a welter of words, but the fact is that local authorities have their plans passed and are ready for building. Then, if there is to be a new plan, redesigning takes up to 12 months. Redesigning and all the other considerations will mean that it will take that time to get things going again. If this charge is only temporary, planning permission will have to be sought again


if councils follow what the hon. Gentleman says, although, eventually, it may not have been necessary.

Mr. Diamond: The situation is moving forward the whole time. There are some houses at the building stage, some houses at the planning stage. It is quite unrealistic to say that the situation is static as every hon. Member opposite seems to envisage. They imply that we are frozen in our position; that all imports are frozen, and that one cannot bring timber in from Canada or elsewhere. The impression has been given by hon. Members opposite, I am sure not deliberately, that, at the moment, all timber coming in both for housebuilding and furniture is affected by these charges. That is not the case, as was made perfectly clear in Committee.
All the timber that comes in in bulk, the vast majority of which is for house-building, is not affected by the charge at all, provided that it is not planed—and it mostly is not. What might be called the rough-hewn timber is not affected by the charge. All that we are considering here is the further manufactured timber, and I can only repeat that if we are to exclude all wood and wood products—and this is a much wider Amendment than we discussed in committee—and then proceed on that basis with a whole variety of things, we would shortly have practically nothing left on which to base the charge, and it would have to be a penal charge to have any effect at all.
The hon. Member for Wycombe (Mr. John Hall) has not understood the situation at all. He keeps on repeating, basically, that there is a fixed situation; that we have a certain amount of goods coming in and we must not do anything to stop that. But, by and large, imports are coming in at a rate 15 per cent. greater than last year. Semi-manufactured and manufactured goods are being imported at a rate of 23 per cent. higher than the figures for last year. One cannot claim that it is precisely an increase of 15 per cent. that is essential to keep business exactly as it is now.
What we say is that producers and manufacturers must look carefully at their plans once more to see whether it is necessary to import as much as they are importing. One cannot continue to import if one cannot pay the bill, and it

is our job to bring it to everyone's attention that during the term of the previous Administration imports were going on at such a rate that this year to the extent of about £700 or £800 million annually, we were not meeting our commitments on current and capital account.
That is a very serious situation. We have to relate our proposals to that situation, not to a static situation, but to one in which imports are coming in at an ever-increasing rate—1963 more than 1962, 1964 at a greater rate than 1963—[Interruption.] I will give the figures. In 1962, our total imports ran at £4,487 million; 1963, £4,812 million; 1964, £5,500 million. If this duty is successful, and reduces these imports, as we would wish, at a rate of £300 million, we still have £5,200 for the current year, which rate is £400 million in excess of the previous year—

Mr. Reginald Maudling: The Chief Secretary said that imports were coming in at an increasing rate, but if he looks at the latest trade returns he will see that, in spite of obvious forestallment, imports have, in fact, been falling.

Mr. Diamond: We will see what the figures show when they come out, as they shortly will.

Sir D. Glover: At the moment, we are not discussing the whole field, but wood, and the whole argument about wood is, as he said, that imports are going on. Our housing target this year is higher than it was last year, and the housing target for next year is higher than it is for this year. That is why the imports of wood have been going on. If they are to be stopped, the houses will not be built; if they are not stopped, the prices will go up.

Mr. Diamond: The answer is that those who have the responsibility of producing, building, whatever it is, must turn their minds to the difficulty which is facing the whole nation, that we cannot go on importing forever at a rate at which we cannot meet the bills. They must turn their minds, as I am sure they will be willing to do, to new methods of production, to greater efficiency, to redesigning, and to all means by which a reduced amount of timber can produce the same number of houses and furniture. That is the challenge which faces the industry, a challenge we should attempt


to meet, and not to ride off the whole time, as the hon. Member for Wycombe has done, by saying that precisely the same amount of imports has to come in.

Mr. Costain: Will the hon. Gentleman ask the Minister of Public Building and Works to alter the building regulations so that we can alter designs?

Mr. Diamond: The hon. Member suggests that although it is possible to alter designs that is held up because of some formalities. If that is so I should be glad to look at the formalities, but my experience is that it is not that which causes this problem but that time and time again excessive amounts of timber, concrete, steel and all the rest are put into building, far in excess of what is needed if modern designs are accepted.
That illustrates the difficulty. We are trying to bring home to the House the seriousness of the situation and the fact that we have, therefore, to subject to this tax planed wood, finished, semi-manufactured and manufactured articles. Otherwise, we shall not succeed in achieving

the purpose of this charge. Otherwise, we shall only exclude until we have such a small base left that the tax would have to be penal to be at all effective. For these reasons I am sorry, but we cannot accept the Amendment.

Mr. John Hall: I thank the Chief Secretary for his courteous and patient reply to the points that we put to him. He has made one thing clear—that he knows very little about the furniture industry and nothing about the building industry. He has also made clear the intention of the Government that this surcharge will limit imports and that if it fails to do so it will fail in its purpose. That, apparently, means that the Government are prepared to accept a reduction in building and standards for building. This, obviously, is an attack on the homes of the people. I therefore recommend my right hon. and hon. friends to divide the House.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 147, Noes 168.

Division No. 31.]
AYES
[11.28 p.m.


Agnew, Commander Sir Peter
Digby, Simon Wingfield
Kaberry, Sir Donald


Alison, Michael (Barkston Ash)
du Cann, Rt. Hn. Edward
Kerr, Sir Hamilton (Cambridge)


Allan, Robert (Paddington, S.)
Eden, Sir John
Kilfedder, James A.


Allason, James (Hemel Hempstead)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Kimball, Marcus


Astor, John
Emery, Peter
King, Evelyn (Dorset, S.)


Baker, W. H. K.
Errington, Sir Eric
Lancaster, Col. C. G.


Balniel, Lord
Fletcher-Cooke, Sir John (S'pton)
Litchfield, Capt. John


Batsford, Brian
Forrest, George
Lloyd, Rt. Hn. Geoffrey(Sut'nC'dfield)


Beamish, Col. Sir Tufton
Foster, Sir John
Lloyd, Ian (P'tsm'th, Langstone)


Berkeley, Humphry
Fraser, Rt.Hn.Hugh(St'fford &amp; Stone)
Longden, Gilbert


Berry, Hn. Anthony
Giles, Rear-Admiral Morgan
Loveys, Walter H.


Bessell, Peter
Glover, Sir Douglas
Lubbock, Eric


Biffen, John
Gresham-Cooke, R.
Lucas, Sir Jocelyn


Biggs-Davison, John
Grieve, Percy
MacArthur, Ian


Bingham, R. M.
Griffiths, Peter (Smethwick)
Mackenzie, Alasdair (Ross &amp; Crom'ty)


Birch, Rt. Hn. Nigel
Grimond, Rt. Hn. J.
Mackie, George Y. (C'ness &amp; S'land)


Black, Sir Cyril
Gurden, Harold
McNair-Wilson, Patrick


Box, Donald
Hall, John (Wycombe)
Maginnis, John E.


Boyd-Carpenter, Rt. Hn. J.
Hall-Davis, A. G. F.
Maudling, Rt. Hn. Reginald


Boyle, Rt. Hn. Sir Edward
Hamilton, Marquess of (Fermanagh)
Maswell-Hyslop, R. J.


Brinton, Sir Tatton
Harris, Frederic (Croydon, N. W.)
Maydon, Lt.-Cmdr. S. L. C.


Brooke, Rt. Hn. Henry
Harris, Reader (Heston)
Meyer, Sir Anthony


Bruce-Gardyne, J.
Harvey, John (Walthamstow, E.)
Mitchell, David


Butcher, Sir Herbert
Hawkins, Paul
Morrison, Charles (Devizes)


Carr, Rt. Hn. Robert
Heald, Rt. Hn. Sir Lionel
Mott-Radclyffe, Sir Charles


Channon, H. P. G.
Heath, Rt. Hn. Edward
Murton, Oscar


Chichester-Clark, R.
Higgins, Terence L.
Nicholson, Sir Godfrey


Clark, William (Nottingham, S.)
Hiley, Joseph
Noble, Rt. Hon. Michael


Cooke, Robert
Hill, J. E. B. (S. Norfolk)
Onslow, Cranley


Cooper, A. E.
Hirst, Geoffrey
Osborn, John (Hallam)


Cooper-Key, Sir Neill
Hogg, Rt. Hn. Quintin
Page, R. Graham (Crosby)


Corfield, F. V.
Hornby, Richard
Pearson, Sir Frank (Clitheroe)


Costain, A. P.
Hornsby-Smith, Rt. Hn. Dame P.
Peel, John


Crawley, Aidan
Howe, Geoffrey (Bebington)
Peyton, John


Curran, Charles
Hunt, John (Bromley)
Pounder, Rafton


Currie, G. B. H.
Irvine, Bryant Godman (Rye)
Powell, Rt. Hn. J. Enoch


Dance, James
Johnston, Russell (Inverness)
Price, David (Eastleigh)


Davies, Dr. Wyndham (Perry Barr)
Jones, Rt. Hn. Aubrey (Hall Green)
Prior, J. M. L.


d'Avigdor-Goldsmid, Sir Henry
Jopling, Michael
Pym, Francis


Dean, Paul
Joseph, Rt. Hn. Sir Keith
Rawlinson, Rt. Hn. Sir Peter




Ridley, Hn. Nicholas
Thorpe, Jeremy
Webster, David


Roots, William
Tiley, Arthur (Bradford, W.)
Whitelaw, William


Russell, Sir Ranald
Vaughan-Morgan, Rt. Hn. Sir John
Wilson, Geoffrey (Truro)


Smith, Dudley (Br'ntf'd &amp; Chiswick)
Walder, David (High Peak)
Wise, A. R.


Spearman, Sir Alexander
Walker, Peter (Worcester)
Wolrige-Gordon, Patrick


Stanley, Hn. Richard
Walker-Smith, Rt. Hn. Sir Derek
Woodhouse, Hn. Christopher


Summers, Sir Spencer
Wall, Patrick
Woodnutt, Mark


Taylor, Edward M. (G'gow,Cathcart)
Walters, Dennis



Taylor, Frank (Moss Side)
Ward, Dame Irene
TELLERS FOR THE AYES:


Thompson, Sir Richard (Croydon, S.)
Weatherill, Bernard
Mr. Ian Fraser and Mr. More.




NOES


Abse, Leo
Harper, Joseph
Oakes-Gordon


Allaun, Frank (salford, E.)
Harrison, Walter (Wakefield)
Ogden, Eric


Armstrong, Ernest
Hayman, F. H.
O'Malley, Brian


Atkinson, Norman
Hazell, Bert
Oram, Albert E. (E. Ham, S.)


Bagier, Gordon A. T.
Herbison, Rt. Hn. Margaret
Orbach, Maurice


Barnett, Joel
Hobden, Dennis (Brighton, K'town)
Orme, Stanley


Baxter, William
Holman, Percy
Oswald, Thomas


Bennett, J. (Glasgow, Bridgeton)
Horner, John
Page, Derek (King's Lynn)


Binns, John
Houghton, Rt. Hn. Douglas
Pargiter, G. A.


Blackburn, F.
Howarth, Harry (Wellingborough)
Parkin, B. T.


Blenkinsop, Arthur
Howell, Denis (Small Heath)
Pavitt, Laurence


Bowden, Rt. Hn. H. W. (Leics S. W.)
Howie, W.
Popplewell, Ernest


Bradley, Tom
Hoy, James
Probert, Arthur


Bray, Dr. Jeremy
Hughes, Emrys (S. Ayrshire)
Redhead, Edward


Brown, Hugh D. (Glasgow, Provan)
Hughes, Hector (Aberdeen, N.)
Rees, Merlyn


Brown, R. W. (Shoreditch &amp; Fbury)
Hunter, Adam (Dunfermline)
Richard, Ivor


Buchan, Norman (Renfrewshire, W.)
Irving, Sydney (Dartford)
Robertson, John (Paisley)


Callaghan, Rt. Hn. James
Jackson, Colin
Robinson, Rt. Hn. K. (St. Pancras, N.)


Carmichael, Neil
Janner, Sir Barnett
Rodgers, William (Stockton)


Castle, Rt, Hn. Barbara
Jeger, George (Goole)
Rogers, George (Kensington, N.)


Coleman, Donald
Jenkins, Hugh (Putney)
Ross, Rt. Hn. William


Conlan, Bernard
Johnson, Carol (Lewisham S.)
Rowland, Christopher


Cullen, Mrs. Alice
Jones, Rt. Hn. SirElwyn(W. Ham, S.)
Sheldon, Robert


Dalyell, Tam
Jones, J. Idwal (Wrexham)
Shore, Peter (Stepney)


Davies, G. Elfed (Rhondda, E.)
Jones, T. W. (Merioneth)
Short, Rt. Hn. E. (N'c'tle-on-Tyne,C.)


Davies, Harold (Leek)
Kelley, Richard
Short, Mrs. Renée (W'hampton, N. E.)


Davies, S. O. (Merthyr)
Kenyon, Clifford
Silkin, John (Deptford)


Delargy, Hugh
Kerr, Dr. David (W'worth, Central)
Silkin, S. C. (Camberwell, Dulwich)


Dell, Edmund
Lawson, George
Slater, Mrs. Harriet (Stoke, N.)


Diamond, John
Leadbitter, Ted
Slater, Joseph (Sedgefield)


Dodds, Norman
Lever, L. M. (Ardwick)
Snow, Julian


Donnelly, Desmond
Lewis, Ron (Carlisle)
Solomons, Henry


Driberg, Tom
Lomas, Kenneth
Soskice, Rt. Hn. Sir Frank


Duffy, Dr. A. E. P.
Loughlin, Charles
Spriggs, Leslie


Edelman, Maurice
McBride, Neil
Stewart, Rt. Hn. Michael


Edwards, Robert (Bilston)
McCann, J.
Taverne, Dick


English, Michael
MacColl, James
Thomas, George (Cardiff, W.)


Ennals, David
MacDermot, Niall
Thornton, Ernest


Evans, Albert (Islington, S. W.)
McInnes, James
Tinn, James


Evans, Ioan (Birmingham, Yardley)
MacKenzie, Gregor (Rutherglen)
Urwin, T. W.


Fletcher, Ted (Darlington)
MacPherson, Malcolm
Varley, Eric G.


Fletcher, Raymond (Ilkeston)
Mahon, Simon (Bootle)
Wainwright, Edwin


Floud, Bernard
Mallalieu,J.P.W.(Huddersfield, E.)
Walker, Harold(Doncaster)


Foot, Sir Dingle (Ipswich)
Manuel, Archie
Wallace, George


Foot, Michael (Ebbw Vale)
Mapp, Charles
Warbey, William


Fraser, Rt. Hn. Tom (Hamilton)
Marsh, Richard
Watkins, Tudor


Freeson, Reginald
Maxwell, Robert
Wells, William (Walsall, N.)


Galpern, Sir Myer
Mendelson, J. J.
Whitlock, William


Garrow, A.
Mikardo, Ian
Williams, Alan (Swansea, W.)


Gourlay, Harry
Millan, Bruce
Wilson, William(Coventry, S.)


Gregory, Arnold
Miller, Dr. M. S.
Winterbottom, R. E.


Grey, Charles
Milne, Edward (Blyth)
Woof, Robert


Griffiths, David (Rother Valley)
Molloy, William
Wyatt, Woodrow


Hale, Leslie
Morris, Alfred (Wythenshawe)
Yates, Victor (Ladywood)


Hamilton, James (Bothwell)
Morris, Charles (Openshaw)



Hamling, William (Woolwich, W.)
Murray, Albert
TELLERS FOR THE NOES:


Hannan, William
Norwood, Christopher
Mr. Fitch and Mr. Ifor Davies.

Clause 7.—(PAYMENT OF REBATES.)

Mr. MacDermot: I beg to move Amendment No. 10, in page 7, line 33, at the end to insert:
and
(d) that the applicant is a person ordinarily resident, or, in the case of a body corporate,

incorporated, in the United Kingdom, or (not being such a person) has produced or manufactured those goods in the course of a trade or business carried on by him in the United Kingdom".
Perhaps it would be convenient also to discuss Amendment No. 11, in page 10, line 4 to leave out "and (b)" and to insert "(b) and (d)".
This is substantially a drafting Amendment in the sense that its intent is to make explicit what I think everyone has assumed was implied in the rebate provisions. It is obviously necessary not only to define clearly the transactions which qualify for rebate—and this is done in the Bill—but also to define who are the persons entitled to claim the rebate. Clause 7(6) defines the person at the receiving end of the transaction, as it were, but the Bill as drafted did not define the person who initiates the transaction and can apply for rebate on it. On adoption of the Amendment the definition provided will include not only persons ordinarily resident in the United Kingdom and bodies incorporate here, but also persons or bodies who produce or manufacture goods in the course of trade or business carried on by them in the United Kingdom.
If the House wishes, and if I have leave to speak again, I can explain the Amendment at greater length, but perhaps at this late hour this is all that the House will wish to hear now by way of explanation. The essence of the Amendment, as I have said, is to say expressly what was implied. I should make it clear that it does not in any way preclude payment in the cases alluded to by the right hon. Member for Bexley (Mr. Heath) in putting forward an Amendment to Clause 7(6) in Committee. He instanced two cases in which fears had been expressed that rebate would not be available to be paid although, in justice, it would appear that it should be.
I promised to look into those cases, and I have done so. Perhaps it is sufficient if I say that it appears to us that in each of them it would be possible for rebate to be paid. I undertake to write to the right hon. Gentleman and explain the matter more fully.

Mr. Hirst: I had an Amendment down which was discussed in Committee and which I later withdrew. I was led to withdraw it—I think that it was a mistake on my part—by the assurance which the hon. and learned Gentleman gave me. I am sure that he gave it quite sincerely, but he could not have grasped the point which I was trying to make. It is a very technical matter. In Committee, I put the point fairly shortly at about ten

minutes to four in the morning, not an easy time for anyone to speak.
I shall not repeat what I said in Committee. I sought to substitute the much more reasonable test of residence which would avoid the anomalies with which we are fairly well familiar in our tax law. I thought that I had made the point clear. I instanced two cases, but, so far as I can see, they are still not covered. I am quite ready to be guided on it, and, if the point is a little difficult to deal with now by immediate answer, I should be happy to have a communication from the Financial Secretary in due course. I hope that he can give me an idea that there is some means of meeting the point.
I am the first to admit that it is complicated, and I shall be only too glad to be corrected if I am wrong, but, as I understand it, goods exported for use by United Kingdom registered companies operating overseas would qualify only if the goods were exported by the company which is to use them or by a company which actually controls it. That was an aspect of the case which struck me as somewhat fantastic, and, as I see it, the Amendment does not deal with it. At least, I am so advised.
Since I raised the matter in Committee, I have been given two instances, and I put them to the House now. Goods exported by a United Kingdom company and sold to another and independent company which uses them for its own purposes would not, as I understand, be covered by the Bill or by the Amendment. Secondly, goods exported by a subsidiary company of a group for use by another subsidiary of the same group, both being registered in the United Kingdom, would not qualify. I am advised that the Amendment would fail to meet either of those cases.
My original proposal was to take out of line 20, in Clause 7 (6, a), the reference to incorporation, because incorporation does not mean anything in this context. It does not matter whether a company is incorporated. What does matter a great deal is where it is managed and where it is trading. Therefore, the test of registration was what I mentioned in Committee, but, apparently, nothing has been done to meet the position of such companies.
I realise that nothing of the kind is intended, but I feel a little cheated in


this matter. I thought that the point was clear, and I thought that the hon. and learned Gentleman had taken it. He has not met it in the least, and I should not have withdrawn my Amendment had I thought that an Amendment of the kind now before us would be what I should see on Report. I have good ground for believing that, to a great extent, the present Amendment is designed to stop foreigners and not to help British industry.
I would not object to that in part, although it is only part of the story, but the fact of the matter is that I do not think it would do it. It is like the usual zeal of the Customs in this matter, but it is laced with an almost unusual degree of stupidity on the part of the Government, because it would not have that effect at all. All that such companies have to do if they want to qualify is to put themselves right by getting registration in this country. Then they will be acting in an identical way with anybody else registered here and so will qualify for the rebate.
So I do not feel that we have been met in the slightest on this matter. I think that the proposal is likely to fail in its intention. Meanwhile, the just case of British industry goes unanswered. The people who ought to be in are still kept out, and, from my reading of the Amendment, the people who ought to be kept out can put themselves in. A United Kingdom company registered in this country cannot change its system of management or control or place of operation just to please the Chancellor, and a lot of that is bound up in our export pattern.
Little, if any, additional cost would be entailed if the Financial Secretary were to meet the point I have in mind. The rebate could always be made payable by various artificial methods, by passing the transaction through a company registered outside the United Kingdom. So we are back to the paradox which I put recently in Committee. The hon. and learned Gentleman said that my wording would not meet the case, and he may have been right, but by his wording he appears to be shutting the door to the foreigner setting up a purchasing organisation here to benefit from the rebate—and the foreigner can get round it—while he still leaves the position unjust for British industry.
I hope that I have made the position clear. If not, I will write the hon. and learned Gentleman a full memorandum so that it can be closely studied. If I have made myself clear, I should like an answer because, with no intention of being rude, I feel a little cheated having withdrawn my Amendment in the belief that I should be given something which met my point of view.

11.45 p.m.

Sir Harmar Nicholls: My comments on Clause 4 were made in modified anger. My comments on this Amendment to Clause 7 are made in sorrow. I did not see a great deal wrong with the wording until my hon. Friend the Member for Shipley (Mr. Hirst) spoke, and I should like to read his memorandum to be able to understand what he finds wrong with it.
However, we ought not to accept the Amendment without realising that it in no way improves the Clause. This is described as an export rebate. At best, that is what it is. By no stretch of the imagination can the Clause, even amended, be called an export incentive. But it is an export incentive that we want. The effort ought not to be to cut down exports. What we want is increased exports, and we want a real incentive. The Amendment, which is well worded to meet the narrow point referred to, will not give us that incentive.
It is good to see here both the Chancellor and my right hon. Friend the Member for Barnet (Mr. Maudling) who, I have no doubt, will be Chancellor again in a few months' time. I hope that they both bear in mind that Clause 7 as now to be amended must be improved very much before we can get to the point of improving exports. The method must be simple, direct and easily applied. It means that we shall probably have to get the G.A.T.T. to alter its rules, and the sooner we start doing that the better.
My right hon. Friend the Member for Barnet resisted that course, as did his predecessors, and it looks as though the present Chancellor, despite Clause 7 and this Amendment, is also resisting it. But it needs to be done. Only 30 or 40 firms are responsible for 30 per cent. of our exports. Eight thousand members of the F.B.I. should be making a greater contribution to exports, but the Amendment, as it has been explained to us, will not get them to do so.
I hope that the Chancellor and, later, my right hon. Friend the Member for Barnet, will get the G.A.T.T. amended so that we can give a profit and rebate to the firms which earn foreign currency. It can be done in a direct way on an accountant's certificate.
That sort of inducement would give us export incentives which would put right our balance of trade and it is only by doing something as drastic and as constructive as that that we shall get out of the dilemma the country is in. While I am prepared to welcome Clause 7 as amended—at least as I understand it until I read the memorandum promised by my hon. Friend the Member for Shipley—I hope that the Chancellor and my right hon. Friend the Member for Barnet will realise that something more substantial must be done. The sooner we get on with it instead of tinkering about, the better.

Mr. MacDermot: Perhaps I may reply, by leave of the House. I congratulate the hon. Member for Peterborough (Sir Harmar Nicholls) on beating his hon. Friends to the post and succeeding in making his Third Reading speech while we are still on Report. He decries a provision which directly offers an export incentive and which will make available to exporters rebates totalling an estimated £75 million. He is aware—he alluded to it—of the provision of the G.A.T.T. within the framework of which we have to operate in trying to do anything in a Finance Bill.
The hon. Member for Shipley (Mr. Hirst) referred again to the question which as he said he raised at a late hour in Committee. I did not comment on that earlier for I did not think it was on the point of the Amendment, but I will do so now. As I understand it, he was dealing with the definition of the overseas purchaser. What this Amendment is concerned with is the definition of the vendor—the exporter, in effect, from this country.
It is obviously essential that the scheme must make it clear to all parties concerned, not only the Customs authorities but also the commercial parties, who is to be treated as the last United Kingdom seller of the goods, otherwise there is a danger that double claims may be made or no claims at all when the rebate is due.
We also contemplate that there may be adjustments between traders so that the benefit of either all or part of the rebate may be passed on to someone other than the person who is entitled to claim the rebate. These adjustments cannot be made as a matter of commercial transaction unless there is real certainty who are the parties concerned.
It was for that reason, as well as for the convenience of the Customs, that the test of place of incorporation of the purchasing company was put into the Bill rather than the test of residence. The test of place of incorporation is easy to apply. It is a matter of public knowledge. Under the Companies Act, overseas companies having a place of business here must state on their bill-heads, and so on, the country in which they are incorporated. That is a matter which, in case of doubt, can easily be verified. Residence, on the other hand, has, I understand, been interpreted as the place where management and control of a company are exercised. It may mean no more than where the board meetings are ordinarily held. This is not necessarily a matter of public knowledge and, also, may vary from time to time.
The analogy of the use of residence as the test for tax purposes was mentioned, but that would provide no assistance in this case, first because the decision of the Inland Revenue for tax purposes relates to a past tax year, whereas under the rebate scheme the facts need to be known at the actual time of the sale of the goods. Secondly, it would not be either proper or practicable for the Inland Revenue to disclose to Customs officials details of the affairs of companies which are declared solely for tax purposes.
In any event, it is not merely the Customs who need to know the status of the purchaser of the export goods. The first essential is that the supplier should know, so that if he is entitled to do so he can make a claim or, if not, can contract to sell in the knowledge that someone else can claim. These, in short, are the reasons. If I have not answered the hon. Member's points sufficiently, I will be glad to conduct what, I am sure, will be an interesting correspondence with him on the subject.
The hon. Member referred also to two examples of cases in which, he thought,


rebates were not claimable. As I understood them, one at least of them was the same as one of the examples given by the right hon. Member for Bexley (Mr. Heath), to which I referred when first addressing the House. I will, however, look at them carefully and undertake to write to the hon. Member.

Amendment agreed to.

Clause 8.—(ADVANCES AND REPAYMENTS OF REBATE.)

Amendment made: In page 10, line 4, leave out "and (b)" and insert "(b) and (d)".—[Mr. MacDermot.]

Orders of the Day — Schedule 1.—(EXEMPTED GOODS.)

Mr. MacDermot: I beg to move Amendment No. 12, in page 14, line 30, at the end to insert:


33.01
…
…
Essential oils (turpeneless or not); concretes and absolutes; resinoids.


This is one of those Amendments where we show how unfrozen we are, that our briefs do not all advise "Reject", that we listen to reasoned cases when they are made by hon. Members opposite, that we are open to argument and persuasion and, when we are convinced that Amendments put forward are ones which we can accept in accordance with principle and proper administration, we do so. We gave an undertaking to move these Amendments to put in slightly more correct form Amendments moved by the hon. Member for Ilford, South (Mr. Cooper). I am glad to do so.

Amendment agreed to.

Amendment moved: In page 14, line 42, at end insert:


38.07
…
…
Spirits of turpentine and other terpenic solvents; crude dipentene; sulphite turpentine; pine oil.


38.08
…
…
Rosin and resin acids and derivatives; rosin spirit and rosin oils.—[Mr. MacDermot.]

12 m.

Mr. Robert Cooke: I hope that I am in order in saying a word or two, because the Amendment comes as a result of the activities of my hon. Friend the Member for Ilford, South (Mr. Cooper) and it concerns very much some constituents of mine. I hope that the

Government will not find themselves in the position of having to do this sort of thing in future.
The point which concerned my constituents particularly was the question of turpentine, rosin and resin, and so on. That might not at first glance appear to be a liquid with which Bristol is much concerned. Those constituents of mine were most concerned about the uncertainty about these products, which are vitally necessary in papermaking, I believe.
At one o'clock last Thursday afternoon they rang me up in a great state of distress because they understood, or had heard a rumour, that there were to be certain exemptions, or that undertakings had been given late on Wednesday night, and they could not possibly have the OFFICIAL REPORT in their hands, since it would not be published till Saturday morning, in spite of the activities of the Postmaster-General to bring things more up to date; and Saturday morning is not a working day. Although my constituents are naturally grateful to find that this exemption has been made, there was no way, apparently, for their knowing it was to be made, and it would appear that they would not have been in these difficulties if these substances had been exempted in the first place.
I understand, also, that the Government found themselves unable to include myrcene in the exemptions and did not give any very satisfactory reasons for so doing. I understand that if this substance were to be allowed in it would save us a bill of from £1 million to £2 million in foreign currency which now will have to be paid. I would have thought that in this technological age the Government would have seen fit to make the fruits of this technological advance available in this country without the impost which is being proposed.
I could have enlarged at great length on this subject, but I hope that hon. Members will not stimulate me into further conversation on this subject because I know the House is anxious to hear my right hon. Friend the Member for Barnet (Mr. Maudling) on the Third Reading of the Bill. Of course, my constituents are delighted to find they are not to be penalised on this particular occasion, but surely this is just another example of something


which should never have been done in the first place. Will the Government keep an open mind with regard to future exemptions, which, I understand, can be made by order, without requiring further legislation? Will they bear that in mind in the future?

Amendment agreed to.

Orders of the Day — Schedule 2.—(RELIEF FROM TEMPORARY CUSTOMS DUTY.)

Mr. MacDermot: I beg to move Amendment No. 14, in page 19, line 16, to leave out "the foregoing paragraph" and to insert:
paragraph 1 or paragraph 2 of this Schedule".
This is a drafting Amendment consequential on the aircraft relief.

Amendment agreed to.

Further Amendment made: In page 19, line 47, after "1", insert "or paragraph 2".—[Mr. MacDermot.]

12.3 a.m.

Mr. MacDermot: I beg to move, That the Bill be now read the Third time.
I move the Third Reading almost formally, but there is just one point to which I wish to draw the attention of the House because we did not have an opportunity of doing so on Report. In Committee, we had quite an interesting debate on the question of the effect of the oil duty upon disabled persons, and my hon. Friend the Chief Secretary, in reply to that debate, pointed out that this was a matter for the Minister of Health to consider in the first place, owing to his power to deal with the matter by regulation.
We were pressed to give an undertaking that the decision would be reached by Report. We could not give that undertaking, but we did, nevertheless, immediately get in touch with the Minister of Health, and hon. Members may be aware that there was a Written Answer given by the Minister of Health to a Question on the Paper today, announcing that war pensioners and National Health Service patients with invalid tricycles will be given an allowance of £5 a year in respect of petrol duty, in place of the present allowance which—I am subject to correction—I think runs at £3 a year at the moment.
This will take effect from 1st December. The car maintenance allowances which are paid to war pensioners present

a more complex problem, and the Minister of Health is still considering the matter and how best to deal with it.
I thought that hon. Members might like this matter brought to their notice at the earliest opportunity. Apart from this, I do not think that the House wants to hear further from me at this stage. I believe that my right hon. Friend the Chancellor will wind up the debate, so I will leave him to deal with any true Third Reading matters.

12.6 a.m.

Mr. Maudling: I will endeavour to be brief, but I cannot be quite as quasi-formal as was the Financial Secretary.
We come to the end of the discussions on the Bill which, as we have explained in clear terms throughout, the Opposition regard as bad, a Bill which will do nothing to improve our economic situation and, in fact, taken as a totality, may do harm to it. There are only four proposals in the Bill—the increase in Income Tax, the increase in petrol duty, the imposition of the surcharge and the export rebate. I will briefly take each in turn, in the reverse order.
The export rebate is put forward as a positive measure to stimulate exports. We on this side—and, indeed, the whole House—welcome any measures designed to stimulate our export trade, but we must express our doubts whether this measure will have any appreciable effect. The measure of the incentive given to anyone exporting goods from this country will be very small indeed in practical terms. On the other hand, the cost of £75 million to the revenue and the consequent burden on the country's finances are very heavy. Clearly, many difficult problems will arise from the operation of the scheme and there will be arguments as to who should benefit—the export merchant, the manufacturer and so on. I think that its legality internationally is at the least doubtful.

The Chancellor of the Exchequer (Mr. James Callaghan): Why?

Mr. Maudling: I think that it will be acceptable in the circumstances of the greater illegality of the surcharge. The right hon. Gentleman has asked why we did not introduce this earlier. I have said that we considered such a scheme and that such a scheme has been in Whitehall over many years. The answer


to his question is twofold. First, the benefits likely to arise, compared with the cost involved, are small. Secondly, I doubt very much whether the export incentive without the introduction of the import surcharge would have been worth the candle.

Mr. Callaghan: The right hon. Gentleman misunderstood me. When the legality of this is being challenged by those who are not friends of this country overseas, I wondered why he felt that he had to give comfort to them by lending his authority by casting doubts on its legality.

Mr. Maudling: The question of legality is a question of fact. I seem to recall that, speaking in the House a little while ago, the Chancellor criticised us for not having done this earlier. I challenged him a while ago when he said that we ought to have done many things. I asked, "Which things?" I also asked whether at the time he had advocated these measures. The only one which he could dredge up, after a good deal of thought, was the fact that we had not introduced an export incentive. I am giving him reasons why we did not do so, and I think that, on the whole, they are very good reasons. But I am equally sure that, in the circumstances of the present day, this export incentive will be internationally acceptable. As I said earlier, where the example of members of the Six is concerned, I regard complaints from them as not complaints that we should entertain.
The surcharge is in some ways the major measure in the Bill. Whatever the arguments about the comparative merits or demerits of surcharge and quota, it is clear that the introduction of this surcharge was very seriously mishandled by the Government. The effects on our international relations are well known and I am a little concerned—and perhaps the Chancellor will help the House on this—at the reports one is constantly receiving of British export orders being cancelled as a result of the surcharge. I believe that some of these stories are put around by our competitors deliberately, but there is a real danger here, one which we must not ignore, and the House would welcome an assessment by the Chancellor and his views on how he feels this situation will develop.
I interrupted the Chief Secretary earlier about the urgency argument and the trend of imports. I say again, and deliberately, that if one looks at the trend of imports over the last three months—not the last month alone, for one should not take one month by itself—against the background of what must have been, as any businessman would know, a very large amount of anticipatory ordering of imports forestalling the possibility of import controls, there can be no doubt that the level of imports—and this must be obvious to any independent observer—had already begun to fall substantially before any question of the surcharge arose.
I come to the details of the surcharge. My hon. Friends and I are profoundly dissatisfied with the explanations given by the Government as to the nature and details of the surcharge. We queried it from the outset, we queried the level of the surcharge, the need for having a universal level over all types of goods, for imposing it on goods already here or in transit and we queried, in particular, the purpose of imposing the surcharge on goods which would in any case come to this country.
This last point is where the arguments put forward by Government spokesmen have been so confusing. Time and again my hon. Friends have asked, "If you say that the purpose is to keep out imports, what is the point of applying it to products and goods which will come to this country in any case?" We have not been given a satisfactory answer to that question. The Government still seem to be uncertain about whether the purpose of the surcharge is to cut down imports or whether it is deflation, which is a wicked word in some, but not all, of the many concentric circles which exist on the benches opposite.
Having listened to the Financial Secretary this afternoon—to his interesting and helpful statement about pharmaceuticals—it is difficult to see what he meant. He said that he did not want to reduce imports, but did want to stop them going up. It is difficult to follow the Government's reasoning. Is the purpose of the surcharge to stop goods coming in, or to gather revenue from goods which will come in willy nilly, in ally case? This is the weakest link in the whole chain of arguments from the Government about


the surcharge and one on which they have totally failed to meet the arguments adduced by my hon. Friends.
The third proposal is the increase in the tax on hydrocarbon oils. Our argument has been that this is bound to put up production costs—and at a time when exports are vital, to put up production costs must be wrong. I agree that the Government say that they are taking this into account by increasing the export rebate from £70 million to £75 million, but no hon. Member can believe that that fractional increase in the rebate will compensate for the general increase in costs which is bound to result from this increase in the petrol duty, particularly since about 60 per cent. of it will fall on trade, commerce and industry.
The fourth proposal is to put up the standard rate of Income Tax. This we believe to be wrong in principle because we believe that it is operating against effort, against incentive and against enterprise. We also believe it is wrong because it is bound to have a bad effect on both savings and investment. Undoubtedly, a great deal of the additional £122 million of revenue which the Chancellor expects to get from this increase in the standard rate of Income Tax will come not out of consumption, but out of savings, both company and individual savings. Undoubtedly, the incentive to invest in this country is bound to be reduced by it, because the net return after tax on investments made is reduced by the increase. Therefore, taking all these four proposals, we say that the exports rebate will be doubtful in its practical effects, while the other three cannot but fail, in practice, to make worse our economic problems.
Finally, there is the effect of the Budget in inflationary or deflationary terms, about which there has been so much controversy. It still seems, whatever may have been said, that the effect will be inflationary. It will, if the Government's calculations are right, cut out about £300 million worth of imports, but this very fact, as successive Government speakers have recognised, creates of itself a new problem of inflation. It is the Government's intention to meet this by £200 million from the surcharge, and £93 million from the increased duty on petrol and, with restocking, we are told that this will balance the disappearance

of £300 million of imports, and the £75 million for the exports rebate.
This, then, is the balance of inflation and deflation arising from the operation of the surcharge and exports rebate and the petrol duty; but this is surely not deflationary in any sense. It does not reduce demands on the economy. If we turn to the other half of the Budget—the increased expenditure of £340 to £350 million, and the increased revenue from the stamp and Income Tax—I can only repeat that, although, mathematically, they appear to balance, it is bound to be that while the expenditure items are such that their total effect will be felt in increased demand, the additional revenue designed to counterbalance it will not be felt in full. That is because the tax on individuals and on company profits will come out of savings, and will not have the deflationary effect other savings would have.
The total effect of the proposals in this Budget are bound to add to demands on the economy. There may be those things which will act in a deflationary manner. Perhaps the very presence of the Government is deflationary because the uncertainty created by its announcements to date has affected investments, and will affect them over the years ahead; but I doubt whether that appears in the Chancellor's calculations.
We oppose this Bill because we believe—and nothing which has been said during the course of our debates has changed our views—that it will put up costs and prices and only serve to make our economic problems more difficult than they were.

12.19 a.m.

Sir Cyril Osborne: I have said nothing up to now in the House about this Finance Bill, or taken part in the Budget debates, but I have stayed tonight because there are one or two things which I should like to put from the point of view of the small manufacturer.
First, I very much regret that this Third Reading is taking place at such an hour. We are concerned with one of the most important Bills in the whole of the parliamentary year and it should have been taken at a more normal hour. The Chancellor, if I may remind him,


spoke during the Third Reading of the first post-war Socialist Budget in 1946. He spoke for 16 minutes and, generally, said he did not agree with everything that his own Chancellor was then doing. This has some importance because, if, as the Government claims, it is legislating to deal with what we have been told is the tragic economic situation it has inherited, then that legislation should not be pushed through when, so to speak, the nation is not looking. We should have had a proper debate at a proper time—not when half the House is absent.
The businessmen on whose behalf I seek to speak say that there are two practical tests of the Chancellor's proposals. First: will they make our economy more efficient? The businessmen say that they will not do that. Second: will they make the nation live within its income? I say that they will make the nation live increasingly outside its income. I think that the proposals were brought in rather in a panic, and that if the right hon. Gentleman could have his time over again he would produce a different type of Finance Bill altogether.
These proposals have destroyed business confidence for the time being. They have produced uncertainty in business, and that is the worst enemy of business confidence. I fear that, unless we are very careful, 1965 will see a very bad trade slump. Already, there is evidence of orders falling off. Already, as far as I can see, there is a danger that the country will next year face a very difficult trade position. As a consequence, trading profits will be a great deal less, and the amount of tax collected will be correspondingly less. We may see unemployment up to a 1 million—[HON. MEMBERS: "No."] Hon. Members can say "No," but many of them are not as closely in touch with business as others of us.
To increase the standard rate of Income Tax from 7s. 9d. to 8s. 3d. is the wrong way to stimulate the economy. The Chancellor has made a wrong decision. He should not have taxed men's earnings, but their spendings. We want the nation to earn more and to spend less, and Clause 1 will have just the opposite effect. It will cause men not to work so hard, and not to try to earn as much money.
I recently came across an example of that in one of my factories—a textile factory which has for some time been extremely busy. I was round one Saturday morning where a lot of men were working—and some of our people are doing a fine job of work, let us make no mistake about that. I said to a presser, who makes a lot of money, "Will you help this afternoon to get this stuff out for Monday morning?" He said, "Me? Guv'nor, last week I paid so much in P.A.Y.E." He mentioned the amount. "Me work this afternoon and pay a lot more, and City playing at home as well? Not me." I put this to the Chancellor very seriously. If he raises direct taxation more, and penalises the men who produce our wealth, he will tend to make them not work hard.
The man said, "This is against all trade union rules and traditions. We have always said that if you work overtime you should have time-and-a-half, but if I work extra this afternoon, as you want me to, I shall get proportionately less." These men are not interested in their gross earnings, but in their total take-home money. If the Chancellor wants more efficient production, and if we are to have it, we need to reduce overheads and get prices down to allow us to sell better in the export market. The Chancellor has gone the wrong way about it. He should tax spendings, not earnings.
That is the workman's point of view. Now look at it from the employer's point of view.

Mr. Loughlin: I am very much intrigued about this mythical employee who earns so much money that he will be caught in the Income Tax net by the increase in standard rate. Will the hon. Member tell us what the man is earning and what will be the increase in tax that he will pay?

Sir C. Osborne: The hon. Member uses the word "mythical". If he will give up his next six weeks' increase in pay as a Member of Parliament, I will accept the challenge. I will take him to this man, who is not mythical, and he can talk to him personally. This man is not mythical. He feared that he would have to pay extra for working on Saturday afternoons.
Look at the operation of Clause 1 of the Bill on the successful businessman


who produces the goods so that we can get exports. After all, exports are more important than imports. It is no good trying to deal with the problem of imports unless we can get an improvement in exports. A man paying top Surtax has now to pay 18s. 3d. in the £ on the top ranges of income. That means that he will be working for the State until about Guy Fawkes night and for himself only in the last six weeks of the year. This is not very much encouragement to him.

Mr. Henry Solomons: Would not the hon. Member agree that it is not what is taken away but what is left that matters? The man paying 18s. 3d. in the £ has quite a lot left.

Sir C. Osborne: That is perfectly true, of course, just as hon. Members when their pay is increased will take a lot more home than the old-age pensioner will. The successful businessman, upon whose efforts the Chancellor has to rely does not get much encouragement if the Chancellor is to take more and more from him and leave less and less. That will not encourage him to make an extra effort. The Clause gives the impression to the businessman that the Chancellor is determined somehow to squeeze all profits out of private industry and leave practically nothing.
I commend to the Chancellor the editorial comment in The Times on Monday, which quotes the Chairman of Barclays Bank, D.C.O., as saying:
Profits are the motive power of economic growth …
—[Laughter.]—How stupid hon. Members can be when they laugh at something they do not understand. The Times goes on:
The recent fashion in Britain to regard profits as 'hardly respectable' has doubtless played its part in the relatively poor progress made by the United Kingdom since the war.
Instead of increasing direct taxation in this way he would have got better results in the export markets by giving export subsidies. If he continues the policy of increasing still further direct taxation, as under Clause 1, he will destroy the mainspring of our economic activities. If he does that, I should like to know what he proposes to put in his place to make the economy work. This is the problem which faces the country.
By Clause 2 an extra 6d. is placed on the price of petrol. I wonder whether the Chancellor realises the industrial consequences, not to the giant industries but to the smaller businesses throughout the country. I speak from experience, for I am associated with a small civil engineering company. Within days of his proposal, into the office came numerous letters from contractors for whom we have to do a lot of earth, stone and rock moving for foundation work. They said that they were sorry, but they would have to put up their prices for the sub-contracting because of the increase in the price of petrol which was imposed by Clause 2. This impost affects this type of trade, as well as distributive trades, which spend so much on petrol. The Chancellor must know that this tends to put up our costs and will tend to increase our prices, and therefore must make it more difficult for us to sell abroad.
Under Clause 3, which, I think, is the most difficult that he has got to answer, he has put the 15 per cent. ad valorem duty on imports under the word "temporary." I know that the question has been asked before, but this is the crux of the whole matter. How temporary is "temporary" so far as industry is concerned? If the impost does not last for more than two years, it cannot have any permanent effect upon our problems. If, on the other hand, he takes it off quickly owing to foreign pressure, he will merely put up unnecessarily our own costs of production.
May I give another example? Another company with which I am associated, a textile company—[Laughter.] I do not see that there is anything funny about trying to find employment, paying good wages and producing exports. If hon. Members could only realise how stupid they are, they would not laugh so much. I should like to tell the Chancellor that because of the relatively high price of Lancashire cotton yarns, we have been buying a great deal from Portugal. Portuguese yarns were roughtly 10d. per 1b. cheaper than the comparable Lancashire yarns on a price basis of between 60d. and 70d. per 1b.
The directors feared that something like this might happen. They are sensible business people. They bought all they possibly could, and this affects our trade balance. They bought at 10d. per 1b.


cheaper than they could buy Lancashire yarns, in spite of the fact that the price already includes a 7½, per cent. Import duty. The Lancashire suppliers, knowing that they have a guaranteed home market, promptly put up their high prices by another 4d. or 6d. per 1b.
This material is used for the specific purpose of making clothing for working-class people which is sold in the popular stores. If the company can manage until August it can do without buying any more Portuguese yarn, because it can live on what it has already purchased. If the Chancellor takes off the surcharge by next August, which some newspapers suggest he is likely to do, the effect of his action will have been to temporarily put up prices of clothing to the poorest people. It will not have affected the total import of the commodity, because once he takes off the surcharge there will be a flood of this cheap stuff into the country again, for it will be 1s. 3d. to 1s. 4d. cheaper than the comparable Lancashire yarn.
If, therefore, the surcharge is to be temporary, the right hon. Gentleman will merely have done injury to the economy, put up our costs and increased the cost of living and not affected the real situation at all. I ask the right hon. Gentleman, therefore, how temporary this surcharge is to be. Unless he keeps it on for at least two years it cannot affect our position permanently at all. But if he does—and this is the other side of the argument—it will make our relations with E.F.T.A., the Common Market and America more and more difficult, and if we are not careful we shall have not only reprisals from them in their own markets but in third world markets in which we have to compete with them. I hope, therefore, that the right hon. Gentleman will be good enough to say something about this issue.
As for export rebates under Clause 7, my friends who concentrate on the export trade say that the proposals are pathetically small, that they are just enough to annoy our foreign competitors but not enough materially to increase our exports. Furthermore, I put it to the Chancellor that there is no ultimate benefit to our country if by any means at all he induces exporters to sell goods abroad below their proper price, which is a danger and a temptation in some

industries and trades. If we sell abroad at materially below our home prices we are not only failing to secure for the Chancellor taxation through profits but we are actually making our import-export position worse.
I should like the right hon. Gentleman to guard carefully against driving industry to get exports at any price. Our object should be to get exports to sell at a profit, because however much his hon. Friends may sneer at profits they are the basis of our welfare services. Instead of giving, as he has done under Clause 7, this quite inadequate export incentive, if the right hon. Gentleman could induce the people who control dock labour to see that our exports go through that bottleneck more quickly and to see that our exports are not left on the docks for weeks, he would do far more to increase our exports and cure the imbalance of trade.
I beg the Chancellor to look at the practical points which I have put to him. He cannot incorporate them in the Bill now, but he can answer the fundamental question about the temporariness of the 15 per cent. surcharge. If the right hon. Gentleman will do that and if in his statement tomorrow on tax proposals he puts back confidence into normal business, not the giants of industry but the ordinary small business man who is employing between 200 and 500 people, he will restore confidence which will help him and help to solve the nation's difficulties quicker than anything else.

12.40 a.m.

Sir Alexander Spearman: The House will be glad to know that, at this late hour, I shall confine myself entirely to Clause 3 and be as brief as I can.
I have three points to make about the surcharge. First, the handling of it. Even an ardent supporter of the Bill could not convince an objective and impartial observer that it had been introduced by the Government in a skilful way. I have always heard that, when E.F.T.A. was first established, the Ministers agreed among themselves that in the intimate environment of the Association they could speak in confidence and with a freedom which had been impossible in the other situations in which they had met.
I think that this explains some of the disappointment and bitterness which is


felt today by our E.F.T.A. partners. On 3rd December, The Times, reporting the O.E.C.D. meeting, quoted the Belgian Minister of Foreign Trade as saying that Britain
had instituted in this very forum this year a procedure for prior consultation on changes in trade practice".
What a sad contrast to that action of the last Government we have been witnessing lately.
Secondly, will the surcharge achieve its objective? I agree that it will, to some extent, slow down imports. I think that it was Charles Lamb who once said that, by burning down one's house, one could have roast pork, but the cost was stupendous and the product was poor. That just about hits this situation. The cost of this proposal is very great. Whatever the Chief Secretary may have said today, it will inevitably protect the inefficient producer. It brings less competion at a time when more competition is urgently needed in British industry. Costs will be pushed up by the extra cost of machinery and partly manufactured goods. We have had instance after instance of this in the speeches of my hon. Friends during the past few days. Also, of course, there will be some increase in inflationary pressure.
More serious and more lasting is the ill will the surcharge has created. On every side, I hear our salesmen saying that, when they travelled abroad in the past few weeks, they encountered difficulties and antagonisms which they had never met before.
Still worse is the possible effect on world policy. I believe that the contribution which this country can make to world prosperity, and, in this dangerous nuclear age, perhaps to world safety, too, is to set an example in freeing and expanding world trade and building up confidence in the Western world. Instead of that, we have disastrously gone into reverse. We are encouraging a parochial and protectionist spirit. I do not believe that Mr. Heath Robinson at his most ingenious could have contrived a more clumsy instrument for slowing down imports.
Thirdly, is it necessary? Any arbitrary control of imports is always bad, but I accept that, in extreme emergency,

it may be necessary, rather as a doctor will prescribe a harmful drug for a patient in order to get him through a few hours until he can be operated on. But that is not our situation. At least in October, our balance of payments position was nothing like as serious as it was in 1951 or 1948. In 1948, the drain on the gold and dollar reserves was £1,023 million. It is about comparable to the situation in 1955 and 1961. What happened was that the economy was a little overheated and there was a tremendous amount of stock building, no doubt in anticipation of the election.
What is the alternative to this proposal? I believe that it is what the Government have done, and what the United States did after the assassination of President Kennedy—to get a loan to tide us over a temporary period. I believe that in the short run this measure was quite unnecessary, and that in the long run it does no good at all. When it is taken off there will be a rush of imports. It does nothing to create what is needed, which is an ability to produce goods more competitively. On the contrary, it makes it more difficult.
I listened to the Prime Minister on television last week. He was asked whether he thought that in his first 50 days there had been any mistakes. He replied that all Governments make mistakes; and, of course, that is true. The really successful man is not the man who makes no mistakes. Infallibility is not given to us humans; everyone makes mistakes. The successful man is the one who has the courage and good sense to cut his losses in time, and if only right hon. Gentlemen opposite, who must see the folly of this measure now, would have the courage and good sense to cut their losses, the country would benefit very much.

12.46 a.m.

Mr. H. P. G. Channon: I shall delay the House only five minutes. I wish to follow up some of the points made by my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman).
I have had the pleasure, which the Chancellor has not had for good reasons, of listening to practically all the Committee stage and Report stage debates, and, in particular, the debates on Clause


3 and the surcharge. I think that the House will agree that the points made were made for genuine reasons. There was no obstruction. But many serious points were treated by the Treasury Bench with great lack of sympathy. I will not argue at this late hour whether the Government were right or wrong to apply the surcharge, but what I strongly resent, and so do many people, is the method by which they have chosen to apply it and the inflexibility with which they have treated the matter since.
I appreciate that the surcharge was imposed extremely quickly. I have heard of great ill will caused abroad by failure to consult and by the other measures which the Government have taken. But surely the least the Government could have done on the home front was to make sure that they applied the surcharge with equity upon a large number of people who were facing some hardship. I was astonished to find during our debates that the Government were prepared to give no concession to goods which were under contract, no concession to goods already in transport and no concession to those who were in severe hardship. All these matters point to the fact that, although perhaps it is not intended, there is a severe measure of retrospection in the surcharge.
What is worse is that the House, by the Government's will, has gone on imposing a charge on health, knowledge and homes. [HON. MEMBERS: "Oh".] That is strictly accurate. Hon. Members opposite may be entitled to say that they do not think that the effect will be as great as some of us have made out, but what I am saying is a matter of strict accuracy and I am not trying to overstate the case. They have imposed this tax on health, knowledge and homes.
Earlier today, the Financial Secretary talked about pharmaceuticals. He said that he did not wish to limit the imports of pharmaceuticals coming in at the moment, but to apply the brake generally, whatever that may mean. I understood that the purpose of the surcharge was, as stated in the White Paper:
A scheme for temporary import charges will be introduced immediately with the object of affecting a substantial reduction in the present level of imports.
Yet now the Financial Secretary says that he does not wish to reduce the level of

imports of drugs coming into the country—quite understandably.
Surely the surcharge has not been put on as a revenue-producing measure. No member of the Government has suggested that, although some back benchers opposite have come close to saying so. The Government might have looked at the matter with a little more flexibility by exempting goods which will come in any way. The surcharge has not reduced the importation of certain goods. It has merely put a tax on things which will come in regardless—drugs, for example—or which cannot be stopped because they are under contract or are in transit.
As the Financial Secretary admitted, there are many hard cases for relief. But, despite three days of constructive examination of the Bill in Committee, and again today, the Government, I am sorry to say, have seen fit to make very few concessions. I hope that the Chancellor will say—I am sure he will—that he will review all these matters which have been raised sympathetically in the next few months and will not necessarily wait for blanket release of everything from the surcharge. I hope that he will release many goods as early as possible where there is good reason to do so.
I support my hon. Friend the Member for Louth (Sir C. Osborne) in saying that one result of the surcharge is considerable lack of confidence by industry in the Government. The Government imposed it in a very bad way indeed. They have got themselves in a mess. [HON. MEMBERS: "No."] I am not arguing now about the wisdom of imposing the surcharge, but the method, which has been inflexible, inelastic, unfair and unjust. That is what I mean when I say that the Government have got themselves in a mess. I hope that the Chancellor will do all he can, although it is too late in this Bill, to relieve some of the injustices caused by the imposition of the surcharge.

12.53 a.m.

Sir Henry d'Avigdor-Goldsmid: Third Reading is customarily the time when we try to abandon the making of debating points and concentrate on things which are of national importance. Before I do that, however, it is only right that we should pay a modest tribute to the Chancellor and his junior Ministers who have assisted him.
The right hon. Gentleman has not been here very much, for he has had other places to go to, but he has had very agreeable deputies and I must say that, although we were arguing before what was undoubtedly a panel of hanging judges, they delivered their verdicts—or, rather, read their briefs—with good manners, patience and charm. Perhaps the palm should go to the Minister without Portfolio, who was undoubtedly Judge Jeffreys in this bloody assize—or should I say bloody Committee?
I notice, too, that the Chancellor, returning from Paris, commented that when one has been in a typhoon a Force 9 gale is quite agreeable. I expect he would consider our debates here to be something in the nature of an autumn breeze. But he should realise that when we have spent as long as we have on this very simple Measure, we must wonder how we are to get through his main Budget in April—if he ever makes it—in as short a time as was taken for the Lloyd George Budget of 1909. I really do not know.

Mr. Loughlin: Is this a speech in the national interest?

Sir H. d'Avigdor-Goldsmid: I am grateful to the hon. Member, who is always anxious to speak in the national interest, but usually in a seated position and without adding very much to our debates.
My hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) has put very well what we feel about the Bill. I was sorry for the Chancellor of the Exchequer in bringing it in. It is designed to destroy the confidence that the country normally enjoys. Both at home and abroad, it has had that effect. It has neutralised the effect that some of the Government's other Measures might have had. I say to the Chancellor in all sincerity that unless he looks at this matter again, unless he sees what a blunt instrument it is when applied to the economy, which is unlikely to recover from it if it is left as it is, the prospects are very bleak.

12.56 a.m.

Mr. Hirst: I, too, wish to speak briefly, because I have taken part in most of the proceedings on the Bill.

First, however, I join with several of my right hon. and hon. Friends in saying that I deplore the rush with which the Bill has been put through the House, with Third Reading at this time of night. Even more do I deplore the speed with which one stage has followed another. It is not in the national interest that this should be so. It is not, as I see it as a not very old Member, in the interests of the House of Commons that it should be so.
Clearly, the rush with which the Bill has been put through has not allowed of the natural consultation which can often lead to a new look at things. For this, there simply has not been time. This has been shown up time after time in these debates, and the nation has lost a great deal by it. I am not prepared to believe that right hon. and hon. Members opposite, many of whom I know and respect highly, if given a little more time, would not have been able to see our point better than they appear to have done by the degree of lack of concession that we have received.
I consider this to be fundamentally, from top to bottom, a bad Bill. I very largely agree with my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) that it is largely an unnecessary Bill. It is full of imposts, the results of some of which have, I am sure, taken even the Government by surprise. I thought that they were doing something to stabilise the economy, but what has resulted? This and other things have so shocked the world—[Laughter.] I shall not quote, but it is on record, what the Prime Minister said in this matter. Hon. Members below the Gangway opposite who are laughing would be more intelligent if they read their leader's speeches.
The Government's policies have shocked the world. The world took considerable umbrage at the actions they were taking. World reaction, quite rightly, was that many of these measures are totally irrelevant. That was the basis on which the damage was mainly done, and a very poor job has been made of trying to clear it up.
I do not say that that is the most important feature for the whole economy, because I think that the inflationary effect of the Finance Bill as a whole is


by far the most dangerous. It is, however, important concerning our reputation abroad that the so-called temporary surcharge has been put on, and that it has been put on in the way that it has been. I have quite a lot of contacts abroad. I have been connected quite considerably from time to time with the export business, and I still am in an organisational way connected with it quite a lot.
I do not need to tell right hon. and hon. Members opposite what the views and feelings are abroad. I am very worried, because I have never known this country to be so unpopular. That cannot be good for our trade and industry, and it really is not justified by any possible results which the right hon. Gentleman may get from this impost. I agree absolutely with what my right hon. Friend the Member for Barnet (Mr. Maudling) has said, that quite obviously imports were falling. Indeed, I will go further. I forecast that, taking the relatively short period, they will fall more.

Mr. Callaghan: Of course.

Mr. Hirst: But not because of this impost. It has nothing to do with this impost whatsoever. Not a bit of it. They will fall for certain technical reasons about stockpiling well known to Members on both sides, but particularly because of the reason my hon. Friend the Member for Louth (Sir C. Osborne) gave.
All of us who have any direct connection with industry will know that right, left and centre, as a matter of business this situation was faced, and it was perfectly right for industry to face it, because industry has a right to face things as it sees them, and there was the shattering foreknowledge of the danger of the Labour Party coming to power, and, irrespective of the balance of payments, and just because of that party's love of quotas and all the rest of it, there was an inherent danger. [HON. MEMBERS: "No."] Oh, yes. I know what I talking about. There was an inherent danger. I know the talk in the board rooms of several companies. "There is a danger," they said. "We will get in a good stock of goods so that we can plan reasonably for the future and not be upset if the Labour Party is returned." There is no shadow of doubt about it.

They built up materials stocks in consequence.
The converse now happens particularly because the President of the Board of Trade in his more confidential moments, as has been reported to me, dealing with the converse position, has or has not—but I have it that he has—actually made, at any rate, such noises to a very considerable number of countries which believe that this impost is probably more temporary than the Government are prepared actually to say. I do see why the Government cannot literally here and now give a date. I appreciate that, but, on the other hand, the same thing is being effected by reason of this, because imports will be dammed up. I know that orders are being placed now with the proviso, which is accepted as the basis, that the imports will take place only if the orders are renegotiated when the surcharge comes off.
I think that if the right hon. Gentleman keeps it on for too long, then the converse will happen and there will be greater damage to our reputation and to confidence in us in countries with which we trade. Heads or tails, he must lose. This is the futility of this step, and it is a futility which three-quarters of the commercial world has demonstrated all down the line in expressing its views and opinions of it.

Sir C. Osborne: If the Chancellor takes it off quickly, as my hon. Friend says, how can it possibly permanently affect our economic situation? That is the problem.

Mr. Hirst: I do not think that it will affect our economy in any way along the line the right hon. Gentleman imagines. The way in which it will affect the economy is by damaging it. This is the sort of miscalculation which has disturbed Europe and led to the run on the £—amongst other considerations which are not germane, possibly, to this discussion tonight. It is this sort of thing which has disturbed confidence, and confidence is very easily disturbed. It was prepared to be disturbed at the thought of a Labour Government being returned. Then, when the Government handle the situation in such a ham-fisted, bad way as they have, what was a possibility becomes a certainty. The Government should not be surprised at the reactions to their policies.
These may have been taken into consideration in early Cabinet meetings of right hon. Gentlemen, but what, so far as I can see, was taken into consideration was a mass of political decisions with no regard whatsoever to the consequences. Everybody in Whitehall and the Customs has been working on these misbegotten decisions ever since, and there has been trouble all down the line, because many have been saddled with this surcharge which I think will make an awful mess of things and achieve nothing beneficial.
We have been arguing all through the Committee that the large majority of the imports which are essential to industry, including many which are the raw materials of industry, will continue to be imported if we are to maintain our basis for exports. We already have "Stop". There is no "Go" about it. We can only hope that we shall not go downhill. If we are to export, we must import these goods, and their import will not be stopped by the surcharge. Industry has stocked up and can live off the camel's hump, as it were, for some time. But for this futile business the position would have fallen into equilibrium, as we said during the election, but because of this evil measure the balance of payments crisis may be more dangerous than ever in a few months' time.
I do not think that the Government get any marks for the Bill, and certainly not for the way in which they have handled Schedule 3, which is an example of muddled minds. I can think of no speech from the Government Dispatch Box which has not demonstrated that. To me, it is a matter of shame that the industry and commerce of the country, and all the work in it, should be treated as a political shuttlecock in this way. Right hon. Gentlemen opposite must realise that they have greatly disturbed world confidence and have caused a great deal of alarm and despondency in many quarters of industry.
If they think that this will be paid for by the export incentive, they must think again. The export allowance is too small to attract people away from the home market and into exports—apart from the first which do the great bulk of our export trade. In fact, about 250 firms do 70 per cent. of the export trade. The export trade can be a dangerous business; I have burned my fingers in

it. To attract many people away from the home market into exports will require a much better incentive than is offered here.
The Chancellor ought to know what people in business circles are thinking of the questionnaire which has been thought up for this occasion. It will be such an appalling bore and they will be so angry with the futility of form filling that they will resent it. We have been told that with chemical products—an industry in which I did part of my training in life—it does not matter whether the chemical changes its form; one can fill in a form and get drawback. This is the sort of thing put up seriously to industry as an incentive for exports.
The Government stand condemned for this Measure. However good they have been at the Dispatch Box in trying to explain it, the fact remains that it is utterly incapable of being explained—and the country knows it, and the world, too.

1.9 a.m.

Mr. Dudley Smith: My right hon. Friend the Member for Barnet (Mr. Maudling) said that this was a bad and inflationary Finance Bill, and I agree with him and with my hon. Friends who have said that this is the case. How inflationary it is will not be seen until the New Year, when prices will begin to creep up and, as a result, many people will realise that the provisions are thoroughly bad.
I want to deal, however, with the provisions of Clause 4, in respect of the surcharge on newsprint. In doing so I must declare an interest, because I am connected with the newspaper industry. But far be it for me to make a special plea, for I am concerned with the Press as a whole.
Newsprint is a special commodity. It has not been treated as such in the Bill and it is a mistake that it should have been included. Newspapers generally, particularly the national ones, have extremely high costs, probably much higher than most other aspects of industry. The new tax will bear severely on them. Newsprint has increased in price since the war more than practically any other commodity and the signs are that there are other increases in prices on the way.
Costs are extremely high in newspaper production, largely due to the high wages paid in the printing industry and the costs of the materials used. My concern is not for the prosperous newspapers particularly but for the many others which are operating at a less satisfactory financial level. At a time when we must be ever vigilant to see that we have a free Press—that we have as many newspapers as possible—this additional charge will impinge drastically on a number of newspapers which are not doing so well. Indeed, to some, it may tip the balance between continuing and closing down.
I will not go into the details of the newspapers which are not being very successful, except to say that it is common gossip that at least one national newspaper is in danger of closing and that two or three others may be on the brink. The extra cost may have a material bearing on whether or not they are closed down. I agree with my right hon. Friend the Member for Bexley (Mr. Heath) that this is a tax on knowledge. It is a retrograde tax which has ramifications going further than perhaps the Government realise.

1.16 a.m.

Mr. Callaghan: I would like, first, to thank hon. Members for the considerate way in which they accepted my absence last week for two of the three days. Perhaps they preferred my absence to my presence. I regard my duty to the House as being the first consideration. The growth of international committees sometimes results in their being a conflict of interests. I regret not being able to be here and I am grateful for the understanding that has been shown.
Having read the speeches in the OFFICIAL REPORT, and having listened tonight to my hon. Friends the Chief Secretary and the Financial Secretary, I feel that my hon. Friends have borne a considerable burden with great diligence and care, and a great deal of knowledge. I thank them for the way in which they did their job.
We had another team opposite, some old familiar faces and some new batsmen, bowlers, or whatever they may be. The right hon. Member for Barnet (Mr. Maudling) was in his accustomed place, although he seemed to desert the crease whenever the right hon. Member for Bexley (Mr. Heath) arrived. I do not

know the reason, but I have been glad to see sharing the bowling the hon. Member for Nottingham, South (Mr. William Clark), and the right hon. Member for Taunton (Mr. du Cann), who has great experience of these matters. Together they formed a formidable team, with the new recruit, the hon. Member for Wycombe (Mr. John Hall). There is no doubt that in terms of their capacity to put their case across, they are worthy foemen, although they did not appear to have their arguments agreed.
The major argument has centred around the question, "Is this Budget inflationary or deflationary?" The right hon. Member for Barnet, from the first moment, has never been in any doubt. He said that this is an inflationary Budget. The hon. Member for Louth (Sir C. Osborne), on the other hand, said quite the contrary; that we are in such a deflationary situation that we are likely to run into a slump, a slowing down of trade and that unemployment faces the country. They cannot both be right.
One thing flows from what the right hon. Member for Barnet said. If he regards this as an inflationary Budget, what would he have done to disinflate the economy? Would he have increased taxes? The Opposition have been voting against every proposal for increasing taxes we have proposed? What is his remedy, if he regards this as being an inflationary situation? I assume that he would have increased the measure of deflation which he thinks I have inadequately taken. What taxes would he have proposed? Would he have used the regulator, or increased Purchase Tax—one way of doing it, I agree—or would he have increased Profits Tax or put up Surtax?
Which taxes would the right hon. Gentleman have preferred to those which I chose? If he analyses correctly, and this is an inflationary situation, then he is quite unjustified in voting against the taxes proposed in the Bill. He should, on the contrary, be proposing additional taxes in order to take the heat out of the economy. I think that it is a measure of the sterility of the Opposition's case—and I am referring to the official, and not the unofficial, Opposition—that it tries to make clear that we are in an inflationary position while it is not willing to say how the inflationary situation should be handled.

Mr. Maudling: I did not say that we were in an inflationary situation. I said that this was an inflationary Budget.

Mr. Callaghan: That really is an amendment which makes no difference. Does the right hon. Gentleman say that we should not have increased pensions? His right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and the hon. Lady the Member for Finchley (Mrs. Thatcher) have both made it clear that they thought the pensions should have been higher and should have been paid sooner; but that would have added to the inflation. This is a disinflationary Budget, certainly in the initial instance, with the initial impact of the petrol duties, which came into force as soon as the Budget Resolutions were passed. The pension increases, as hon. Members know, are not being paid yet.
When we came to office we found that in leaving the balance of payments situation alone the previous Government had let the economy get overheated. We all know of the strain on the construction industries. We have heard my right hon. Friend the Minister of Public Building and Works talking about the acute shortage of bricks. There are well-known signs of strain in the engineering industry. However much the right hon. Gentleman tries to evade the balance of payments issue, he cannot avoid the other question; there is no doubt that, during the summer months, for electoral reasons, he allowed the economy to become overheated.
The right hon. Gentleman knows that when we take the steps we proposed we are following what he would have done had he had the courage. Admittedly, he is walking back a little now, but the simple truth on the balance of payments is this: that all the evidence, and all the persuasive and logical and cogent pleas made from the benches opposite to relieve individual companies and firms and industries from the incidence of the surcharge, neglects one important fact. There is no painless way of solving the balance of payments problem, and that is the overriding case from the Government Front Bench. There is no perfect remedy, either. Everybody can find weaknesses in any plan, but, so far as the surcharge is concerned, it is true to say that operating directly on imports is a method much less deflationary than

operating on wages and incomes as was done in 1961.
To get the same diminution in the level of imports, one has to have much greater deflation by operating through a pay pause and wages freeze than by operating directly. The right hon. Gentleman was committed, and we are commited, to getting a substantial rate of growth which, alas, we shall not see this year. Because the country is committed to this, and desires it, we were right not to choose to tread the path of 1961 all over again, but to try to operate directly.
That is why some other countries, in my view mistakenly, are so angry about it. Some of them say that it is having no effect while others say that it having an appalling effect but, like hon. Members opposite, both cannot be right. Some countries are saying, "You are operating against our exports—your imports—directly, whereas you ought to operate on your own internal economy much more than you have done." That is the battle I have been fighting the whole time. What they did not realise—and this is what I have tried to say to them—is that if we did operate directly on our own economy and deflated the economy to the extent to which it was deflated in 1961, and to the extent to which some would like, the ultimate effect on their exports to us would be as great as, if not greater than, the effect today.
I believe that the country understands and recognises this. That is why it is impossible to satisfy right hon. and hon. Members opposite about all the cases which, considered separately and in isolation, all have a great deal to commend them, but which, in relation to trying to live within our means, and balance our payments, simply cannot be allowed because, in the end, we would be left with practically nothing to reduce imports, or else have to transfer the charge to foodstuffs and raw materials, which the Government deliberately excluded—

Sir C. Osborne: But would not the Chancellor agree that with this admittedly difficult problem of curing the imbalance between our imports and exports as a whole he has concentrated too much on imports, and has not dealt sufficiently with the problem of exports, which I think would cure the problem better?

Mr. Callaghan: There is no doubt that when the hon. Gentleman says this he is uttering a criticism that I have found very widely expressed on the Continent, that we have not solved the fundamental problem of Britain's disequilibrium. I must say that I plead guilty to that charge afer six weeks in office. It is difficult enough to take, when one is abroad, that one has not found the philosophers' stone within six weeks, and has not got the cure for this imbalance between exports and imports, but I cannot take it from right hon. and hon. Gentlemen opposite.
The right hon. Member for Barnet may say that imports would have gone down. That is possible. I suppose that hon. Members opposite were deceived by their own propaganda, and forestalled because they believed that restrictions would be placed on imports by a Labour Government. I do not know why they should have thought that, if they were good businessmen. Indeed, many good businessmen did not believe it because they knew from our policy statements and from our speeches in this House that this would never have been the policy of a Labour Government. But, as I say, deceived by their own propaganda, they created the very situation that has now happened.
This is the difficulty. I do not know whether imports would have gone down. I very much hope that the right hon. Member for Barnet is right, and that they would have done, but, with respect, he has been a poor prophet before. Where arc those exports? I have been waiting for them all the year. He told the whole House, throughout the year, when he was Chancellor, that they were in the pipeline, that they were emerging, and would come. When am I to see them?

Mr. Maudling: If the right hon. Gentleman does not believe that imports will fall next year, and exports rise, why do the Government accept that our balance of payments position will be very much better next year, without any other action being taken?

Mr. Callaghan: I was hoping that I would get an answer to my question, but, instead, I got another question. Of course exports have gone up this year. They have gone up by 4 per cent., but alas, imports have gone up, as the Chief Secretary said, by 14 or 15 per cent. It is not just a matter of forestalling. If the

right hon. Member takes the difference between 1962 and 1963 he will see that it is very substantial. This is one of the serious weaknesses we face that in the field of manufactures and semi-manufactures there is an increase of some hundreds of millions of pounds on imports. It should concern the whole House and the country that this is so.
The right hon. Member is right in saying that the only way to deal with this is to push up exports. When the hon. Member for Louth asks whether I have paid too much attention to imports, the answer is "No." This was a situation in which action had to be taken. I stand by that. On the basis of any advice I could have been given I would have been guilty of a grave dereliction of duty if I had not taken action in relation to balance of payments within a matter of days of getting into office. I stand by that. Although I know that hon. Members opposite will not agree, action should have been taken months earlier. Because it was delayed for so long—I regret having to say this, but I must make the position clear—in the end we had to take more violent action than we would have wished.
One cannot steer a ship by making violent twists on the wheel. The more violent they become, the more violent the correction one has to make. Because the ship was allowed to get so much off-course, we had to make a violent action on the tiller. This means, I quite agree, that it will be a long time before we can get back to those delicate adjustments which, in my view, fit the economy most.

Mr. Maudling: I am most grateful to the right hon. Gentleman for giving way again, but he said this the other day and I must put the question again, because he failed to answer it. What were the measures which he says should have been taken in the summer, and was he himself advocating those measures at that time?

Mr. Callaghan: I was not advocating any measures at that time, because I was told by the right hon. Gentleman, and more particularly by the then Prime Minister, that there was no need to do anything. I certainly was not advocating these measures at that time, but the right hon. Member should read the speeches I made at that time, what I said in the spring Budget debate and in the debate on economic affairs. I must say that


when I read them I am astonished at my own prescience. One could see what was coming.

Mr. Maudling: What measures could I have taken?

Mr. Callaghan: The right Member knows that there were some measures which he considered and rejected. We have had to take some unpleasant measures. He might have chosen different ones. He might have chosen the regulator. In the summer he could have chosen the regulator if he had wished, but that would have been a confession immediately before the General Election that his right hon. Friend the then Prime Minister was wrong, so he did not choose it. In fact, he chose to do nothing.
The Opposition, having opposed everything we are proposing to do, and are doing, in this Bill, have put forward nothing in its place. They may say that it is not their job to do so. When I heard the fervour with which the hon. Member for Shipley (Mr. Hirst) attacked me, I felt that it was exceeded only by the fervour with which he attacked his own Front Bench when he was sitting on this side of the House. I would almost have believed in the fervour of his speech tonight if I had not been used to making such speeches myself from the Opposition benches.
In a difficult situation, where quick decisions had to be taken, this combination of measures is the one most likely to see that the stop on the economy, which we want to avoid, is, in fact, avoided. I have fought, and will continue to fight, to prevent our getting back into the stop-go period. I have resisted demands for this from wherever they come, whether from the Opposition Front Bench or anywhere else, because I do not believe that our economy is in that state at present.
I think that we are in a delicately poised situation and that enough has been done, and is being done at present,

especially if bank advances are focused on exports and on loans for productive industry and all the rest of it, to ensure that we can keep the economy moving. The great distress to me, as I said in Committee, is to find that we have got a growth rate of 2 per cent. and programmes to which we are committed based on a growth rate of 4 per cent. This presents the whole House with a very real problem which we shall have to face before very long, because it is something which the country is crying out for.
I believe that the Budget, which will give assistance to pensioners and which tries to match that assistance by facing the country with the need to pay for that assistance, in conjunction with the other measures which we have taken, represents the best short-term approach to rescuing ourselves from the very difficult problems with which we are confronted. But it is a short-term rescue operation. This is not a long-term Budget. I cannot tell the hon. Member for Louth how long the import charge will last. I do not think that he would expect me to do so. What I do say is that this is not a long-term Budget. It was not intended to be. It is a Budget to meet a short-term situation. There will be another Budget in April, in which other measures of a longer-term nature, I hope, will be taken.
I apologise for speaking for so long. I do not wish to detain the House now, but I feel that I have no reason to be dissatisfied with the reception of the Budget in the country, whatever reception it has had on the Opposition benches. Wherever I have gone, and judging by all the instances that one can find, it looks as though this Budget has been recognised as a realistic Budget based on social justice, designed to do the best for the country in the economic situation with which the Labour Government were confronted on their return to office.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Orders of the Day — ECCLESIASTICAL AREAS, LONDON (REORGANISATION)

1.33 a.m.

Mr. Tom Driberg: I beg to move,
That the Supplementary Scheme to give effect to the proposals of the Diocesan Reorganisation Committee in the Diocese of London for the purpose of making additions to the original reorganisation Scheme in respect of the Guild Church of St. Michael Paternoster Royal, which was laid before this House on 9th November, be disapproved.
I am sorry to detain hon. Members at this time of night, but this is the last of the 28 days allowed for the possible disapproval of a scheme which was laid by the Church Commissioners a few weeks ago. The matter which I am asking the House to disapprove, though relatively narrow in scope, is of some consequence in three ways. There is a parliamentary and, I would almost say, a constitutional aspect of the scheme. There is a legal aspect of it. There is also what I may call an ethical consideration. I shall try to deal with these three points as briefly as I can; first, however, I must say something about the scheme itself and its background.
Hon. Members who were in this House in 1952 may remember our debates on the City of London (Guild Churchs) Act. This Act was worked out because of the dilemma with which the Church authorities were confronted in the City of London after the war and the bombing. There were a number of churches of considerable architectural merit, mostly the work of Wren, some of them damaged in the blitz, and all of them probably "redundant" in the strict sense that there was hardly any resident population left in the City.
This Act embodied a novel and ingenious device for enabling them to be preserved and to be put to a variety of uses far broader in scope than would have been possible had they remained ordinary parish churches. These churches, 16 of them, all named in the First Schedule to the 1952 Act, were to be designated Guild churches. Their vicars are exempted from the statutory obligations imposed on the incumbents of parish churches, such as holding services on Sundays. Instead, they minister to the needs of the million or more workers who crowd into the City of

London every weekday; and each of them had also a special extra-parochial function.
I need not trouble hon. Members further with a resumé of the Guild Churches scheme, except to say that when an amending Bill was discussed in 1960 it was generally agreed that the project was working well and that the Guild churches were making a contribution of value to the life of the City and its workers.
Now I come to the three objections to the Scheme before us. First, the Parliamentary one. The Scheme in question is a supplementary scheme, prepared by the Church Commissioners (and this is how they describe it):
to give effect to proposals made by the Bishop of London and the Diocesan Reorganisation Committee for the purpose of making additions to the original reorganisation Scheme in respect of the Guild Church of St. Michael Paternoster Royal in the Diocese of London.
This verbiage conceals the fact that the Scheme itself, in effect, but without saying that it does, amends the Act passed by Parliament in 1952, the City of London (Guild Churches) Act, to which I have already referred. It amends it by removing the Church of St. Michael Paternoster Royal from the list of Guild churches in the Schedule. I may add, in passing, that this is a church of considerable historical interest, quite apart from its architectural merits: it was founded by a great pioneer of the export trade, Richard Whittington, several times Lord Mayor of London, and it is still haunted by a noble black cat.
Yet, if hon. Members look at the scheme which has been laid, they will certainly not realise that this is its intention and its effect. That basic fact of the scheme is not mentioned anywhere in it. It would surely have been simpler and more suitable to have made this change, if it had to be made, by means of an amending Bill; then Parliament would have understood what was being done and could have treated the matter on its merits.
I am fortified in this view by a passage in Erskine May which does not refer precisely to this kind of procedure, but which seems to me to present us with a kind of analogy—not an exact analogy but a reasonable analogy—to the situation in which we find ourselves. It is in the new edition on page 887 and is under the


head, "Repeal of Public Acts by Private Bills." The Guild Churches Act was not a public Act. I must make that clear. It was a private Act, but an Act of such considerable public importance that the then Chairman of Ways and Means decided that the Bill ought to go to a specially enlarged Select Committee for consideration, and so it did. Therefore, although it was neither a public Act, nor, indeed, strictly a hybrid Act, one might call it a quasi-hybrid Act and regard it, as the Chairman of Ways and Means did, as one of considerable public importance.
It sometimes happens that a Public Act is repealed by a Private Bill, and Erskine May says of this:
But the scope of the public Acts which a private bill proposes to repeal or to amend, and the nature and degree of the proposed repeal or amendment, have to be considered, and provisions of this kind in private bills demand peculiar vigilance, lest public laws be lightly set aside for the benefit of particular persons or places.
I admit that that is not an exact analogy, but it seems to me to express very well the spirit of what I am complaining of in this procedure—
… lest public laws be lightly set aside for the benefit of particular persons or places".
It is even more inconvenient, clearly, when a Private Act of considerable public importance, which received the attention which the Guild Churches Act received, is amended almost surreptitiously by means of a mere supplementary scheme to another Measure. At least, I suggest, the Church Commissioners, when drafting this scheme, should have included a specific and explicit clause to the effect that it was altering the status of this particular church, removing its Guild church status or, to coin a word, "deguilding" it.
The scheme explains that when the restoration, which is now pending, is complete, the church is to be appropriated for certain purposes; some of it is to become offices for a, no doubt, worthy diocesan purpose, and part of it will be a small chapel. This may be an admirable and sensible arrangement. I am not arguing the merits of it tonight. But it should be noted by those who are interested in the Guild church project as a whole that, if this precedent were followed, the whole

project could be whittled away, possibly without Parliament having any idea of what was being done. All the 14 surviving Guild churches—14 others will be left, after this scheme, if it goes through—could be "deguilded", the stipends taken for other purposes, and so on, by means of supplementary schemes of this unobtrusive kind.
This scheme is made "in pursuance of the Reorganisation Areas Measure, 1944"—which brings me to my second point, the legal one, which I believe to be of some substance, also. It seems to me doubtful that this scheme is legally permissible at all. It may be ultra vires. There is no provision in the 1952 Act whereby a designated Guild church can be deprived of its Guild church status or, as I put it just now, "deguilded". I suggest, therefore, that, legally as well as in order to make clear to Parliament what was being done, the Diocese of London and the Church Commissioners ought to have sought to amend the 1952 Act and not to have adopted this procedure.
The hon. and gallant Baronet the Member for Worcestershire, South (Sir P. Agnew), who, I understand, is to reply to the debate, will, no doubt, refer me to Section 27 of the City of London (Guild Churches) Act, 1952, which provides that
A supplementary reorganisation scheme may in the case of any guild church (other than the church of St. Lawrence Jewry) include provisions for any of the purposes specified in paragraphs (c) (d) (e) (f) and (g) respectively of subsection (1) of section 20 of the Reorganisation Areas Measure 1944 in like manner as if this Act were a reorganisation scheme but so that references in that Measure to an incumbent and a patron of a benefice to a parochial church council and to a churchwarden shall in the case of any such supplementary reorganisation scheme be deemed to be references to a vicar and a patron of a guild church to a guild church council and to a churchwarden of a guild church respectively".
It is, therefore, very important to look closley at Section 20 of the Reorganisation Areas Measure, because I believe that that is what the Church Commissioners and their legal advisers have been relying on in arguing that this scheme is legally not ultra vires and in order. Section 20 of that Measure listed a number of things which could be done by a reorganisation scheme. It said that it may in the case of churches include provision for any of a number of purposes,


including (a) the restoration or rebuilding of a church, (c) the appropriation of a church or any part thereof, and (e) the complete or partial demolition of a church. I suppose it is subparagraph (c) that the Church Commissioners are relying on—the appropriation of a church or any part thereof—taken in combination with Section 27 of the City of London (Guild Churches) Act, which refers back to that Measure and says that the supplementary reorganisation scheme can include provisions for any of the purposes specified in those subparagraphs.
I honestly believe that this is a wrong interpretation of that earlier Measure. That earlier Measure is concerned, indeed, with appropriation. It is concerned with demolition. There is no proposal now, thank goodness, to demolish this church, as the Diocese of London was trying to do only three or four years ago. There is a proposal to appropriate, but there is nothing whatever in Section 20 of the 1944 Measure which allows a change in the status of a church. Clearly, there could not be any specific reference in that Measure to Guild Churches, because it antedated the Guild Churches scheme by eight years. But there is no reference in any of those subparagraphs of Section 20 to any change in the status of a church. For instance, it does not say that a parish church can be changed into a chapel of ease, or something else. It refers to closure, demolition, appropriation, and so on, but nothing about any change in status. But this is what in, I must say, a rather underhand way is being done by the supplementary scheme which is before us.
It is clear that when the City of London (Guild Churches) Bill was passing through Parliament no one had any thought that such a power resided in Section 27. That Section was the subject of a report by the then Attorney-General, who addressed himself solely to the possibility that a Guild church might be demolished under it. The Select Committee—I was among a number of hon. Members who served on it—was assured that Parliament would never consent to the demolition of a Guild church. So the Attorney-General of those days clearly did not think that the Section contained a hidden power to deprive a Guild church of its status.
This is equally clear if one reads the very long and exhaustive contribution by Mr. Wigglesworth, who was and is the Chancellor of the Diocese of London. He gave a long exposition before the Select Committee of the meaning of all the Sections in the Bill. It is clear that he did not think about this at all, because if he had suspected that this power lay hidden in these paragraphs it would clearly have been his duty so to have informed the Select Committee when he addressed it on the subject of Section 27 on 29th April, 1952. He did not do so. The theory that such a power resides in this section is quite a recent discovery for the Diocese of London.
I know that the Church Commissioners have obtained learned counsel's opinion which fully supports their action and I have no doubt that the House will be told as much. But I would say to the hon. and gallant Baronet that, as he knows, lawyers do sometimes differ. I myself have taken the precaution in the last few days of taking another counsel's opinion—the opinion of a learned Queen's counsel of great experience in matters such as this—and his opinion differs diametrically from that of the counsel whose opinion the Church Commissioners took. So there is at least some legal dubiety about this matter. It cannot be said to have been proved, hard and fast, that the Church Commissioners are quite in the clear about it.
In any case, the methods used to push this scheme through seem to me to have been less than worthy of the high ideals which no doubt animate its promoters. Since St. Michael Pasternoster Royal has not yet been restored, no formal appointment of a Guild church vicar has yet been made. The clergyman in charge is Canon John Satterthwaite, who is well known to many hon. Members as an adviser on foreign relations to the Archbishop of Canterbury. It is an extraordinary and regrettable fact that he received no notice that this scheme was being hatched. Even as a courtesy one would have supposed that he would have been officially informed.
In fact, he learned of it, to his astonishment, by chance, two months after the closing date for the lodging of objections to the scheme, when he happened to telephone Diocesan House to ask what progress was likely to be made on another


matter, the restoration of the Church. This was on 29th October. He was told that the scheme had been issued in the summer and no objections had been received by the Church Commissioners before the closing date, 31st August.
What they had done was to send one copy of the scheme to the Secretary of the Guild Church Council at his private address during the holiday season. When he returned from holiday he found it awaiting him and assumed—perhaps he should not have done but he did, as, I think most of us would—that copies had been sent to the clergyman in charge of the Church and to the churchwardens. No such other copies were sent and Canon Satterthwaite himself, soon after, had to be abroad, in Germany and Rome, in fulfilment of his duties to the Archbishop.
Canon Satterthwaite, naturally, asked the Church Commissioners for an extension of time so that objections could be lodged. His request was refused. It would be perfectly easy, even at this late date, for the Commissioners to withdraw the scheme and reissue it, in fairness to the clerygman concerned and the Church Council. I hope that they will do so. If they do not, justice will certainly not be seen to have been done, and they will be seeming to take unfair advantage of what one must take to have been a series of accidents and misunderstandings.
One final point, to emphasise the unfortunate way in which the matter has been handled. Hon. Members will recall the sequence of events I have just described—what happened in the summer and the holiday season. I am rather shocked to learn that the Diocesan Reorganisation Committee was told at its meeting on 20th November that a copy of the scheme had been sent to the Secretary of the Guild Church Council and that Canon Satterthwaite had been so informed. To say that one has informed somebody of something when he has learnt it by chance, by telephoning one about something else, when it is two months too late for him to do anything about it, is not a downright lie, but it is a stretching of the truth as economical as anything imagined by Anthony Trollope.
I hope that the hon. and gallant Baronet the Member for Worcestershire, South, when he replies, will tell us that

the Church Commissioners are ready to take the scheme back and insert a clause making it clear that the real purpose of the scheme is to deguild the Church of St. Michael Paternoster Royal and so to obtain possession of the stipend, and thus both inform Parliament adequately of their intentions and give those concerned an opportunity of lodging objections. This would be an act of grace, an act—if it is not unseemly to apply such a word to this great ecclesiastical bureaucracy—of charity.
If the hon. and gallant Member cannot give this assurance, we may be obliged to divide the House.

1.57 a.m.

Mr. Robert Cooke: It is interesting to note that a substantial number of hon. Members are present to take part in or to listen to this debate, even at this late hour, and I am sure that the House is giving its usual thoroughness to this matter, which is important to quite a number of people.
I have received a certain amount of information about this problem and I have a few questions which I should like to ask my hon. and gallant Friend the Member for Worcestershire, South (Sir P. Agnew), who is to reply. In asking these questions, I should like to dissociate myself from some of the sentiments expressed by the hon. Member for Barking (Mr. Driberg) in introducing his query on this subject, because I felt that the hon. Member went a little beyond the actual problem in hand in "having a crack" at the Church Commissioners, if I may use such a colloquial phrase, and adopted a somewhat partisan attitude, if that is possible in church matters.
I should like to ask my hon. and gallant Friend one or two questions. First, what safeguards are there for the priest who is now in charge of this church? What is his future likely to be? Is it in any way undermined by what is proposed? Secondly, I should like to know a little more about what will happen to this fine building. I read that it is in a somewhat dilapidated state, having been severely damaged during the war.
Is it envisaged, if the scheme goes through, that the condition of this fine piece of architecture will be improved? Will the building be restored to something like what it was when designed by Sir Christopher Wren? Will the interior


be fitted out in such a way that it will still be a worthy place of worship? I read with some horror that there are to be offices, and so on, contained within the building and I should like to have assurances that they will not in any way detract from the appearance of the interior or in any way prevent its being used as a place of worship. If my hon. and gallant Friend can answer these two sets of questions, it will be a great help to the House.
Although what the building is actually used for is of considerable concern, the architectural considerations are important. There are people who believe that a church is a sacrament in stone which should not be willingly destroyed or dispensed with, and we hear that there was a threat that this building should be partially demolished. Will it emerge, as a result of this scheme, as a worthy architectural example? Can my hon. and gallant Friend say whether proper access will be available to any places of interest, or memorials of interest, in the interior? Will it be possible for research students, and so on, to be able to have access to anything which could conceivably be of interest in the interior at reasonable times of the day? If my hon. and gallant Friend can answer those questions satisfactorily the scheme would have my support.

2.0 a.m.

Commander Sir Peter Agnew: I have no complaint with the way that the hon. Member for Barking (Mr. Driberg) has moved the negativing of this supplementary scheme which the Church Commissioners have made. This is the last day on which he could have done it. That, however, is not the fault of the Church Commissioners. Having said that I have no complaint as to the general way he deployed his arguments I at once want to rebut, on behalf of the Commissioners, any suggestion that they have acted in an underhand way, or used unworthy methods to promote the scheme with which they are associated. To demonstrate clearly to the House, even at this late hour, I must give a little information further to that which the House has so far received. At the outset, let me say that the duty of replying to a Motion of this kind would ordinarily have fallen on the Second Church Estates Commissioner. He is as yet non-existent, and that is the reason why I, from the other

side of the House, and who am an elected Commissioner, find that duty put upon me.
I think that much of the criticism revolves around the suggestion that Canon Satterthwaite, the priest-in-charge, was left in ignorance of this scheme which we are considering tonight until he read of it in the newspaper. I think that I can satisfy the House that that suggestion is wholly without foundation, and that the hon. Gentleman, in sincerely believing it, no doubt, has, in fact, been categorically misinformed.

Mr. Driberg: This is rather serious. The hon. and gallant Baronet is saying that Canon Satterthwaite himself, from whom I received this information, is a liar.—[HON. MEMBERS: "No."] Yes, indeed. He said that what I said about Canon Satterthwaite not being informed of this was completely without foundation. That comes from the Canon himself. It is not that he read it in the newspaper, but he learned it by chance when he telephoned the diocesan office two months after the expiry.

Sir P. Agnew: At the risk of detaining the House much longer than I wished to do I shall have to give in rather greater detail the somewhat long history of this case. It goes back to 1962—to 23rd November—when the Diocesan Reorganisation Committee of London met and decided on consultations with those concerned, with a view to a reorganisation scheme, to restore the church for use by the Diocesan Council of Christian Stewardship, and that it should be considered and accepted, together with a chapel open to the public, and with a chaplain.
After the Diocesan Committee met and decided in principle that it accepted those proposals—that was on the Friday—it was regrettable that, on the Sunday following, two days later, there was a leakage from a member, clearly, of that Committee, to the Sunday Telegraph, which printed an article by its ecclesiastical correspondent, giving the information that I have just given to the House.
On the following day, Monday, 26th November, the Secretary of the London Diocesan Reorganisational Committee wrote to Canon Satterthwaite to apologise for his apparent discourtesy in not informing him and the Guild Church


Council as to what was afoot—what the proposals were that the London Diocesan Reorganisational Committee intended to support. In that letter he informed Canon Satterthwaite that under the Committee's proposals Saint Michael Paternoster Royal would cease to be a Guild church.

Mr. Driberg: What date was that?

Sir P. Agnew: That letter was written to him by the Archdeacon of Hackney on Monday, 26th November, 1962.
In that same letter the Archdeacon of Hackney as Secretary expressed his wish to consult Canon Satterthwaite and the Guild Church Council and suggested that he might be invited to attend a meeting of the Guild Church Council to explain the proposals fully. The meeting took place of the Guild Church Council and the Archdeacon of Hackney was invited and did attend it. That meeting took place on Thursday, 3rd January, 1963, the immediately following year.
It is important, to clear up the facts, to consider the minutes of the meeting of the Guild Church Council, which have here. Minute No. 148 reads as follows:
The Secretary of the London Diocesan Re-organisational Committee outlined the proposal.
After details about the treatment of the building itself it goes on:
The Archdeacon explained that the church would cease to be a Guild church and that it would not have any parochial status, but that the Bishop of London would appoint a chaplain for the chapel.
There then followed a discussion in which Canon Satterthwaite, as Chairman of the Guild Church Council, stated his objection in that the proposals had been put forward without either reference to the Guild Church Council or himself as Guild Vicar of St. Dunstan-in-the-West—not as Guild Vicar of St. Michael Paternoster Royal, because there has not been one since 1959. But it is also important that at the end of that meeting a resolution was passed by the Guild Church Council as follows:
That St. Michael Paternoster Royal should be rebuilt to provide facilities for cultural activities in the area and that adequate provision should be made for a reasonably sized chapel where regular worship could be maintained and would be of ready access to the public, and that such a chapel should be served by a chapel committee.

I think that the case cannot be sustained that Canon Satterthwaite and the Guild Church Council did not know and were not informed at a very early stage of what were the proposals which the London Diocesan Reorganisational Committee were supporting and were going to put forward if no objections were received. It is evidence that this scheme could be regarded by the Church Commissioners, when the matter came to them later with the approval of the Bishop of London, as an unopposed scheme, after the Guild Church Council had itself gone so far as to move a resolution, the terms of which I quoted.

Mr. Driberg: There is clearly a conflict of evidence here. May I try to clear up the misunderstanding that there must have been? No doubt Canon Satterthwaite knew about this earlier proposal. But what he required to know was the date on which the Commissioners would formally put forward the scheme, so that objections could be lodged. That is what he did not know.

Sir P. Agnew: I do not want to weary the House with a succession of dates, which are really the legal steps one after the other which were taken with all propriety by the Organisation Committee, the Bishop of London and, in their turn, by Church Commissioners.
The Church Commissioners, for whom I speak tonight, had the task of drafting the scheme in its legal sense and then, as they are charged to do under the terms of the Reorganisation Measure of 1944, of sending out notices to those who have to be informed when a draft scheme is proposed so that they may have the proper opportunity provided by the law for registering objections to it if they wish to do so.
The Church Commissioners sent out the notices in the form expressly laid down in Section 52 of the Reorganisation Measure. They sent them out by post to the last known adresses of those to whom they had to be sent. They did not have to send one to the priest-in-charge; Canon Satterthwaite was not directly sent a notice. They sent one, as they are charged to do, to the Secretary of the Guild Church Council, by name, at his address. It so happened that the Secretary of that Council, Mr. Pearson, was having his holiday at the time and got


back late, with only one or two days before the six weeks were up in which it was open to anybody to make an objection.
In the event, the Church Commissioners received no objections and they had every right to regard the scheme as an unopposed one because obviously the Guild Church Council had itself gone so far, and had accepted the principle of the scheme, as to set up a chapel committee and to pass the resolution which I quoted asking that the building be rebuilt as a cultural centre with a chapel.
I turn to the question of the doubt which has been thrown by the hon. Member for Barking on the legality of the processes under which the church, once designated in the Act of 1952 as a Guild church, may be, in the convenient phrase which the hon. Member used, "deguilded". The Church Commissioners have taken counsel's opinion and, furthermore, they have taken the opinion of two separate counsels, and, as a result, they are quite satisfied about the insertion in the Guild Churches Act, 1952, of Section 27, conveying a cross-reference into the Reorganisation Measure of 1944 and making Guild churches subject, if anybody wanted them to be subject, at a later date, to the Reorganisation Measure.
They are quite satisfied that paragraph (c) of Section 20 of the Measure, which states that a church may be appropriated, does, in fact, involve the very process of appropriation to another use and, therefore, destroys the hitherto Guild status of the church. That is why this paragraph is mentioned in the Guild Churches Act. Indeed, one of the other processes might have been asked for by somebody, namely, demolition. If the church had been demolished, who could then have said that it still retained its status as a Guild church? That could not be so.
Therefore, it is the opinion of the Church Commissioners, fortified by the opinion of learned counsel whom they have consulted, that the process under which this scheme was laid on the Table of the House, nearly 28 days ago, is absolutely legal. They believe that the scheme was virtually unopposed, although subject to lengthy discussion in the London Diocesan Reorganisation Committee

and at a meeting of Guild Church Council itself.
It is with that knowledge that they, themselves, having acted most scrupulously in the duties imposed by the Reorganisation Measure, cannot see lit to withdraw the scheme and wish that the Motion to disapprove of it should be negatived if and when it is put to the House.
I should like, briefly, to answer the questions put to me by my hon. Friend the Member for Bristol, West (Mr. Robert Cooke). He asked what safeguards there are for the priest-in-charge in so far as his career is concerned. The safeguards are, I think, ample, because Canon Satterthwaite is the Guild Vicar of St. Dunstan's-in-the-West, which has the appropriate stipend for a Guild vicar. He is also Secretary-General of the Archbishop's Committee on Foreign Relations and, I believe, receives an appropriate remuneration for that. I do not think that there should be any worry on that aspect of this case.
As to what will happen to the building, I can tell the House that the exterior will be restored to present the appearance as nearly as possible to what the great architect, Wren, saw when he had finished his work three centuries ago. As to the interior, copies of the scheme, which were available in the Vote Office, show that the inside of the building is divided as to about two-thirds for the chapel that is to be created in the east and middle portions, and as to the remaining one-third, towards the extreme west, for the offices of the Diocesan Guild of Christian Stewardship.
I cannot say whether any memorials that may be on the walls of the church building in that portion that is to remain as offices will be readily accessible to the public, but I can say that the greater part of the building, the chapel, to which are to be removed the church fittings, which have been carefully looked after and are ready to be reinstalled, will be open to the public at reasonable times.
After the explanation I have given, I trust that the hon. Member for Barking will withdraw the Motion.

Mr. Driberg: Am I allowed to make one or two very brief observations, Mr. Deputy-Speaker?

The Deputy-Speaker (Sir Samuel Storey): Yes. The hon. Member can speak again.

2.22 a.m.

Mr. Driberg: I was completely unaware, I say it frankly, of the resolution by the Guild Church Council which the hon. and gallant Baronet the Member for Worcestershire, South (Sir P. Agnew) had read out, and, of course, I naturally accept what he has said on that point. I was myself under the impression that what the Guild Church Council had agreed to was the scheme in general—for the offices, the chapel, and so on—but that it did not appreciate that this involved also the demotion, if that is the word, of its church from being a Guild church.
I quite see that what the hon. and gallant Gentleman has read out about the chaplain and the chapel rather confirms what he says, but I still cannot understand why it was thought necessary to do this. It is quite possible, in conformity with Section 27 and Section 20 of the other Measure, to appropriate a church or part of a church, and still allow it to retain Guild church status. If the bishop is to appoint a chaplain, anyway, I cannot quite see why there should be all this fuss, and why he cannot make that chaplain the Guild church vicar. Presumably, he would be the secretary of the Christian Stewardship Council, which is to occupy the offices. I cannot understand why they should insist on depriving the church of its Guild church status.
It was a very inconvenient time of year. The Church Commissioners know as well as anyone that August is the time when many people are on holiday and is a a very awkward time to push something through, with 31st August as the last date for lodging objections. I wish that the hon. and gallant Baronet had been able to tell us that, as an act of grace—and they must know the meaning of that term—the Church Commissioners would take this Scheme back just for a few weeks to allow an objection to be lodged and considered in the ordinary way.
I cannot see why he could not have given us that assurance, since there is this definite grievance even if it is based, as he insists—and I accept his word—on a misunderstanding of the position, or on forgetfulness. I wish that he could have

told us that. I do not know what the position is of trying to press the Motion to a Division—I do not know how many hon. Members are left in the precincts of the House, and it might be a farcical Division, to be frank—but I am sorry to say that I do not feel inclined to withdraw my Motion.

Question put:—

The House proceeded to a Division; but no Member being willing to act as Teller for the Ayes, Mr. DEPUTY-SPEAKER declared that the Noes had it.

Orders of the Day — SOUTH COAST RESORTS

Motion made, and Question proposed, That this House do now adjourn.mdash;[Mr. Fitch.]

2.28 a.m.

Sir Neill Cooper-Key: I am grateful for the opportunity of raising the subject of the economic future of the South Coast resorts. The House will recollect that a few months ago the Conservative Administration published the Report on the South East Study. This study outlined a plan to meet the problem of an increased population in the area of about 3½ million by 1981. Although it covered a large area, from the Wash to west of Southampton, including the Greater London area, the study contained proposals which affected two or three of the narrower districts of East Coast resorts.
During the election the right hon. Member for Belper (Mr. G. Brown) said that a Labour Government would scrap this survey. Later it has been remarked that the Government have rejected the survey on the ground that it was defeatist. The right hon. Gentleman, now First Secretary of State and Secretary of State for Economic Affairs, in a debate on 4th November, had some stern things to say about this South East Survey, when outlining in general his plans for regional councils.
These statements and reports of speeches have caused many of us in this House, in local authorities and in the constituencies considerable concern. We do not want nationalisation, State enterprise, direction of labour or control of movements in the coastal areas. They


are not necessary for our prosperity. There is no doubt that the South Coast towns have been more prosperous under a Tory Administration than ever before. Local authorities have been doing and are doing a first-class job. It was, however, because the local authorities saw in this Conservative survey a faster improvement that they welcomed the proposals which are acceptable both as a right and a practical philosophy.
The question which is now exercising us is to what extent a Socialist Government will encourage and support our economic growth in the future. My first question tonight, therefore, is to seek from the Joint Under-Secretary of State for Economic Affairs an indication of the Government's attitude to the problem of the South Coast resorts and the part that they think these areas can play in the future towards the national economy. What are the problems of these areas? Of all the highly-populated areas in the country these towns have not shared in the general post-war boom. They have not, in fact, recovered from the effects of the war when populations were compulsorily evacuated, when there was large-scale bomb damage and when holidays were, of course, non-existent. Shortages, rationing, delays in re-equipment of hotels and the development of local amenities all left these districts behind the rest of the country.
For many years the holiday season has been limited to three months in the year, and local trades and individuals have found it very hard indeed to obtain an adequate income from this industry. Because of lack of openings a substantial proportion of young people have tended to leave these towns for employment elsewhere. Their place has been taken by elderly retired residents to whom the appeal of a seaside resort is strong. But as a result of this, the proportion over the age of 65 has now become very high. In my constituency of Hastings, for instance, there is a percentage of 24·2 per cent. over this age compared with a national average of 11·9 per cent.
A solution could still be found by a wider transfer of light industries to these areas. In recent years it has been the policy, with some exceptions, to limit the number of factories and light industries by the granting of industrial development certificates. Many local

authorities have been successful in these larger projects and we have, for instance, in my constituency of Hastings provided employment in this way for over 2,000 people in recent years. We should like to see these I.D.Cs provided on a more general basis.
At this point I should like to draw attention to the large and increasing source of manpower in these areas of people of early retirement age. Men and women with special talents and adequate energies, if not for actual hotel work, would be useful in clerical and alternative administrative employment. Much could be done to encourage private enterprise and to direct Whitehall Departments to remove some of their sections to these areas where they would find trained reinforcements and probably accommodation for their office staffs at economic rates.
The Government could do much directly to assist these areas by reviving our domestic holiday industry. The season could be prolonged. The former President of the Board of Trade produced a paper some months ago with that in view. Tourism is an important source of imports. European Administrations are developing a highly competitive attitude in subsidising their hotel industry, and here much could be done by fiscal means through generous tax allowances for hotel buildings and equipment.
Train services to these areas could be consideraly improved, and perhaps the best boost locally would be to transfer some of the burden of expenditure from local rates to the Exchequer. The acceptance by the President of the Board of Trade and the Economic Secretary of these problems and their solution would still fall short in our view of the wider co-ordinated plan which the Conservative Administration registered in their survey. This provided to a substantial degree for a faster improvement generally in the economic growth of our coastal resorts. In particular in the case of Hastings there was provision for some 30,000 additional people to be removed from the Metropolitan area and elsewhere. This would have quickly improved the economic conditions in the coastal districts.
It would also have improved quickly the imbalance to which I referred earlier in the towns and rural areas. There would


be a better chance of youngsters finding employment locally after being well educated in the district, and the millions being spent under enlightened planning on protecting the countryside and local amenities, on new homes, new offices and new employment would make a quicker and more emphatic contribution to the national economy.
There is an impression that the present Government do not entertain much sympathy or interest in the conditions or the future of the coastal areas in the South. I must admit that in the post-war years we did not receive much encouragement or consideration from the then Socialist Administration. Some of the views recently expressed by Labour spokesmen do little to reassure us. But I must warn the Minister that plans now approved for the improvements in schools, hospitals and roads must not be put on one side.
We are supporting in general the Beeching approach to railway transport services. In this connection the last Government pledged that no closures would be made unless an adequate and effective alternative service could be provided. I should like to hear that pledge repeated by the Joint Under-Secretary tonight. These are some of the points which I am glad to have the opportunity of putting to the hon. Gentleman. I hope that in reply he will be able to outline Government policy on the special problems of this area.

2.40 a.m.

Mr. Dennis Hobden: I thought it a pity that the hon. Member for Hastings (Sir N. Cooper-Key) approached this subject from a political standpoint because, if there is one issue which we ought to be able to tackle on a non-political basis in the House, it is the position of our seaside resorts and the part they play in our country's economy and life. It seemed to me that the hon. Gentleman wanted his argument both ways. In one breath, he said that the seaside towns were more prosperous under the Conservatives, and in the next he said that they had not shared in the post-war boom.
I shall not discuss the merits or demerits of what was done in the past 13 years because I wish to look to the future of our seaside resorts. The three factors which immediately come to mind

in this connection—I put them not necessarily in order of priority—are the rating revaluation, seasonal employment and unemployment, and the need for more industry in our seaside resorts to take up the slack in the off-peak periods.
The effect of the revaluation on the people of Brighton has been quite grievous, for several reasons. It has fallen extremely heavily on the elderly people who have come to retire in the town, of whom we have a large proportion, because they are living on small fixed incomes, and it has fallen heavily also on those who are struggling to buy their own homes on mortgage and at the same time trying to raise a family. The result of all this on the local authorities, which are aware of the effects of the revaluation, is that they tend to hold back on many schemes which they have in the pipeline and which ought to be brought forward for amenities to attract more people to the seaside resorts. The local authorities have to have regard to the purchasing power of their own people and the way it has been reduced by revaluation. It should be remembered that it was not a Labour Government who introduced the revaluation, and, moreover, the Rating (Interim Relief) Act did virtually nothing to give relief to these particular people.
With the advent of a Labour Government, we should look afresh at the problems of our seaside resorts. Tourism is rapidly becoming one of the biggest businesses in the country and it is also a very lucrative dollar earner. We must consider these matters in relation to the nation's economy and the economy of the resorts themselves. Not only does a seaside resort have to supply the normal amenities which any decent town gives to its inhabitants, but it has also to embark on large expenditure for attractions which will make people from both home and overseas come to it.
I hope that the Government will approach these questions as many countries abroad do. One example which comes to mind is the Irish Tourist Board, which provides loans at low rates of interest so that tourist resorts may build swimming baths and even hotels and modern promenades. We must consider treating our resorts in the same way. I fully support what the hon. Gentleman said about tax reliefs. I understand that the catering and hotel trade is the only


one in the country which receives no tax relief in respect of the tools of its trade.
We must also attract more industry. Given all these things—a revision of the rating system, which I hope the Government will get down to, and a supply of light and heavy industy and subsidies to provide modem attractions, there is no reason why prosperity should not be maintained and the seaside resorts hold their own with any in the world and become the playgrounds of our people.

2.45 a.m.

The Joint Under-Secretary of State for Economic Affairs (Mr. William Rodgers): I am grateful even at this late hour, when the South Coast resorts which we are discussing have probably gone to sleep, for the opportunity of replying to this short debate on an important subject. I am very grateful to the hon. Member for Hastings (Sir N. Cooper-Key) for raising the question and for emphasising in the way he has done the distinctive character of the South Coast resorts and the need to look at their requirements within the total context of our regional planning. I am also delighted that he has appreciated that regional planning is not simply something for one part of Britain alone, more generally for those parts which saw the Industrial Revolution of 100 years ago. Regional planning is something in which all parts of Britain must take part and to which all parts of Britain can contribute.
What are the ways in which the South Coast resorts are distinctive? It seems to me that there are two main features from an economic planning point of view, and both of them have been mentioned by the hon. Member for Hastings and my hon. Friend the Member for Brighton, Kemptown (Mr. Hobden). First, there is the age structure; secondly, there is the employment structure; thirdly, there is the annual cycle of employment and unemployment.
With regard to the age structure, it is interesting that, as the hon. Member for Hastings said, whereas the national average of numbers of the population over 60 is 12 per cent., in Hastings it is 24 per cent. and in the constituency of my hon. Friend it is 18 per cent., which is 50 per cent. above the national average. Nor has Hastings the highest figure. In Bexhill the percentage is as high as 31, and also in Worthing.
The truth is that these towns, largely because of the facilities they provide and their climate and amenities, have attracted and retained a high proportion of elderly people. The point made by the hon. Member for Hastings about providing facilities for employment for the elderly is very interesting. I think he will agree that a great deal more research must be done about finding the sort of employment to which elderly people can adjust and which they will find suited to their ability and physical resources at that age. But the point about the age structure is most important when we consider the future of the resorts.
Secondly, there is employment. Here there are a number of features. I should like to draw attention briefly to two. First, there is the very high percentage of service industries in the coastal towns. The national average is 57 per cent., but in Hastings it is 77·3 per cent. and in Brighton 76·5 per cent. As we see, the percentage of service industries is high. So we know, as both hon. Members have pointed out, that the percentage of manufacturing industry, though rising, is still unusually small.
The second feature about employment is one which follows from what I have said about the age structure of the resorts, that there is a high percentage of elderly people among the registered unemployed. It is true for Bexhill, for example, that nearly 60 per cent. of the registered unemployed are over 60.
Thirdly—this is really the most important feature of the employment and unemployment pattern and the one with which most people are familiar—there is the annual cycle of employment and unemployment with high or relatively high unemployment in January and low unemployment in the summer months.
This year in Hastings, unemployment in January was 3·5 per cent. in July it was 1·5 per cent. In Brighton in January it was 3·5 per cent. and in July 2 per cent. It is a very difficult problem to find a means of providing employment for those who have jobs to occupy them in summer because of the tourist industry but, because these are seaside resorts, find there are not jobs for them in winter.
I should make it plain that, whereas we recognise a problem and one with which we want to deal, we must, as both hon. Members will agree, see it in the


total perspective of the unemployment problem in the country as a whole. It is only fair to say and important to make plain that, serious though unemployment is during winter in South Coast resorts, it is, of course, at most times of the year only a small percentage of the unemployment we find in other parts of the country.
It is even interesting to note that amongst seaside resorts, unemployment in winter tends to be higher away from the south coast. In Clacton in January it was 4·8 per cent., in Blackpool 5·9 per cent. and in Scarborough 6·1 per cent. These are resorts which maintain during the summer a level of unemployment about the same as that in South Coast towns.
A point which deserves looking into is the fact that the greater disequilibrium in these other towns shows that there is a total problem which needs close examination, not only to reduce it in Clacton, Blackpool and Scarborough but also to see whether we can reduce it in South Coast resorts, although the problem may be less there.
The hon. Member for Hastings raised a number of specific points with which I will deal briefly. He asked about the South East Study. The Government are taking a fresh look at it. It would be wrong to anticipate their conclusions. On the other hand, there must be no delay in dealing with the very urgent problem of London housing. However, it will be possible to take a fresh look at the study and make sure that we get the answers right and yet at the same time deal with that part of the problem which can be neglected no longer. We are fully aware of the point the hon. Member made about the study, suggesting that there is considerable scope for expansion in Hastings, amongst other towns.
The hon. Member also referred to offices, which were also mentioned in the study. As he knows, the Accounts Division of the Ministry of Public Building and Works is going to Hastings and this is likely to provide a considerable amount of employment there. It is not only a matter of people going to Hastings to work. New office accommodation attracts employment in the town itself. Here again we are fully aware of the generator effect of office employment. It provides far more employment than

simply for the people who work in the offices constructed.
In this respect, although the hon. Member was a little sceptical about some of the statements of my right hon. Friend, or attributed to him, he will agree that the standstill in office development in London announced on 4th November is a step in the right direction. It may well be that as a result of that, there will be a further development of office accommodation in Hastings as well as in parts of the country further away.
Then there is the question of industrial development certificates. The hon. Member for Hastings will appreciate the difficulty when one looks at the inequalities of employment in other parts of the country, but it should be known that in the last sixteen years only three rejections of industrial development certificates have been sustained. Eighteen applications have been approved, involving floor space of 400,000 sq. ft. and an employment potential of 1,700 workers. I am not saying that this is enough, and I have tried to be frank in placing the problem in a national context, but we can rejoice that there is more manufacturing employment in the area. Granted the other problems and a proper order of priorities, it may well be that more will be done over a period.
Some of the fears which people properly had about employment locally have not been wholly sustained. The closing of the railway workshops at Lancing, for example, caused a genuine and proper fear, but it appears that the hardship has been much less than was expected; and as both hon. Members will know, the site has been acquired by the Sussex County Council for continued industrial use.
We recognise the importance of the tourist industry. This is something which has grown and ought to continue to grow. In the last year, an increasing number of overseas visitors came to Hastings. In 1963, there were 210,000 staying visitors and 800,000 day visitors. This may not be as many people as Hastings would like, but it is a significant number and there is every prospect that it will be maintained and, possibly, increased.
It may be that some of our holiday resorts in Britain still fall rather short of paradise. If this is so, no doubt it is


something which they themselves are anxious to remedy. We recognise, however, that they deserve a lively and prosperous future, and the Government will do all they can to make sure that they achieve that.
There are problems of reconciling amenity to industrial development. In holiday resorts which exist mainly for residential and recreational purposes, our wish, with which I am sure both hon. Members would agree, is to preserve some of their present character while

providing better employment prospects. This I think we can do. Therefore, I do not think that the hon. Member for Hastings, who has raised this matter on the Adjournment and to whom I am again grateful, should feel any doubt. There will be no neglect from the present Government of the seaside resorts and we shall approach their future in no doctrinaire spirit.

Question put and agreed to.

Adjourned accordingly at three minutes to Three o'clock a.m.